Rudd rules out deposit guarantee

Australia's Prime Minister, Kevin Rudd, yesterday ruled out a guarantee for all bank deposits - along the lines of Ireland's precedent this week - and reiterated the government planned to introduce an insurance scheme covering $20,000 for each depositor.

The Courier Mail reported Rudd's comment, which he probably made at media briefings following the Council of Australian Governments meeting in Perth yesterday.

Rudd had waffled in avoiding an answer to this question in an ABC Television interview on Wednesday evening, so presumably the political position's been confirmed as one of no guarantees.

The government's rhetoric has otherwise shifted to highly accommodating regarding the difficult funding position banks find themselves in at present.

In the context of a likely cut of one quarter of a percentage point in the official cash rate next week (and with plenty of speculation over a half a percentage point cut) Rudd and the Treasurer Wayne Swan have said repeatedly in recent days that they call on banks to pass-through the "maximum", meaning what banks say they can afford.

Plenty of bank executives have said they will pass on what they can, meaning, though they never spell it out, that they will cut rates for home loans customers. Borrowers with other forms of credit may be made to wait.