Italy’s Monti Suggests Bank Guarantee Plan

Italian Prime Minister Mario Monti took a plan to create a European system to guarantee bank deposits to the G8 summit as savers’ anxiety built in debt-ridden euro zone countries.

The proposal aims to guarantee bank deposits “with a view to … stopping the hemorrhaging of funds from one country to another, from the south to the north,” the Corriere della Sera newspaper said, without citing any sources.

According to the Corriere, the plan discussed on Friday at the Group of Eight summit in the United States envisages European governments jointly funding guarantees for bank deposits to reassure savers in more vulnerable countries.
The Corriere said Monti’s plan was drawn up with the help of the Bank of Italy and was supported by U.S. President Barack Obama and the European Central Bank (ECB).

The idea of establishing a pan-European fund has existed for some time and has been talked about in several international meetings and was discussed at the G8 summit, a person familiar with the matter said on Saturday.

Many savers have already started withdrawing cash in Greece, fearing banks could collapse or that countries might withdraw from the euro and convert their deposits into less valuable new national currencies.

Data shows depositors have also taken flight from banks in Belgium,France and Italy.

On Thursday, Spain’s Bankia was reported to have seen more than 1 billion euros drained by its customers in the past week, Reuters reported.