Government says Czech banks need no aid

13.10 news from Aktuálně.cz

Aktualne.cz

Written by Aktualne.cz Published on 14.10.2008 11:50 (updated on 14.10.2008) Reading time: 2 minutes

Jason Pirodsky

Written by Jason Pirodsky Published on 14.10.2008 11:50 (updated on 14.10.2008) Reading time: 2 minutes

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Prague – Unlike some other European countries, the Czech Republic is not preparing any rescue packages for its financial sector, the Finance Ministry told Reuters on Monday.

“We are currently planning no such steps, as our banking sector is healthy,” ministry spokesman Jakub Haas said.

The ministry asserts that, since major governmental interferences in the banking sector in the 1990s, the Czech banks have been conservative and have mostly preserved a strong deposits-to-debts ratio.

‘No cash drain’

At the weekend, Czech National Bank Deputy Governor Miroslav Singer said that state guarantees for deposits are not necessary as the Czech banks’ fast assets, which can be quickly converted into cash, have been CZK 30 billion higher since the beginning of October.

“This means that Czech banks are not suffering from any financial drain,” said Singer.

The Czech government is expected to discuss an EU proposal to increase state guarantees for bank account savings from EUR 25,000 to EUR 50,000.

Euro area: Guarantees and recapitalization

Euro zone officials at the weekend agreed on a rescue strategy under which goverments will provide guarantees for inter-bank loans until the end of next year and recapitalize some banks.

The German government yesterday announced plans to pump EUR 470 billion into its financial sector, of which EUR 400 billion will be used for guarantees and the rest for recapitalization. The UK, France and Austria have announced similar measures.

The Mediafax agency has reported that the International Monetary Fund (IMF) is ready to provide Hungary with financial and technical assistance in its current financial difficulties.

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Dominique Strauss-Kahn, the IMF managing director, said yesterday in an interview for the French radio station Europe 1 that the worst part of the global crisis may already be over. Strauss-Kahn added that the IMF will propose reforms of the international monetary system.

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