Greece Guarantees Deposits … Sort of

Greece's banking system "is totally safe and reliable" despite the world financial turmoil and all bank deposits in the country are guaranteed, Finance Minister George Alogoskoufis said on Friday, according to the Associated Press.

Ireland's decision earlier this week to guarantee all deposits in Irish banks prompted a flight of capital to Irish banks and cries of anger from the UK and other European countries which said it scuppers competition.

"I must also state that citizens' deposits in all banks that operate in Greece are absolutely guaranteed," Alogoskoufis said.

However, it was not clear whether legislation offering blanket warrantees to depositors will be initiated as a ministry official speaking on condition of anonymity told the AP the minister's guarantee was a "political commitment."

The European Commission has not been informed by Greece of any plan to guarantee all bank deposits in the country, a spokesman for the EU executive told Reuters.

In Greece, bank deposits of up to 20,000 euros ($27,600) are guaranteed, the minimum amount required by European Union rules.

On Friday, the UK's Financial Services Authority raised the compensation claim for deposits to 50,000 pounds ($88,000) from 35,000 pounds, to boost customers' confidence in the banking system.