Australia to guarantee banks deposits for 3 years

Published on CNN.com

Australian Prime Minister Kevin Rudd said Sunday that his government will guarantee all deposits in the country's banks and financial institutions for the next three years.

Rudd told reporters the guarantee was one of three steps the government is taking to safeguard Australians from the fallout of the global financial crisis.

The government will also guarantee all term wholesale funding by Australian banks operating in international markets and it will inject $4 billion (U.S. $2.6 billion) into residential-backed securities to help shore up the Australian mortgage market.

Compared with the United States, Australia has handed out few sub-prime mortgages, according to CNN affiliate Seven News Sydney.

Banks are heavily regulated and the country has financially benefitted in recent years from China's demand for its mineral resources, Simon Robson of Seven News told CNN.

The International Monetary Fund (IMF) has said the Australian economy will not only withstand the global economic crisis, but its economy will continue to grow -- albeit at a slower rate.

"One of the government's favorite lines at the moment is: 'If you want to be anywhere in the world at the moment, it's Australia,'" Robson said.