Asia should consider bank guarantees in current turmoil: IMF

WASHINGTON, October 17, 2008 (AFP) – Asian economies may have to consider guaranteeing bank deposits as a defensive option against global market turmoil although the region’s financial system remains sound, the IMF’s Asia chief believes.

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European nations and the United States have moved to guarantee either deposits in their entirety or all bank liabilities to shore up investor confidence in the wake of a credit crunch amid a global stock market meltdown.

“I think Asia needs to think seriously about it (guaranteeing deposits),” David Burton, IMF’s Asia-Pacific director, said in an interview with AFP at his Washington office on Thursday.

“It is not necessarily a ‘one size fits all’ policy but it is something that countries in the region need to consider, and I’m sure are considering,” he said.

Singapore, Hong Kong, Australia and New Zealand in recent days moved to guarantee all bank deposits while Japan said it would consider extending a government-backed scheme that guarantees deposits of up to 100,000 dollars.

Burton said that guarantees in the US and Europe raised a critical