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Unlimited guarantee promised for all German accounts

The German government has offered an unlimited guarantee for all private bank deposits, a finance ministry spokesman told AFP on Sunday, in a bid to prevent a panic run on banks in Europe's biggest economy.

Amid a spreading financial crisis, the spokesman, Torsten Albig, said state protection would be extended to all personal savings and checking accounts.

He later told the business daily Handelsblatt that the value of such holdings was estimated to be €568 billion (€784 billion).

“The government wants to prevent at all costs money being withdrawn on a grand scale,” he said.

German Chancellor Angela Merkel had made a pledge earlier in a statement to reporters: “We tell all savings account holders that your deposits are safe. The federal government assures it.”

The conservative leader made the remarks as she said her government was scrambling to salvage a rescue plan for German bank Hypo Real Estate (HRE) so “an institution’s crisis does not become a crisis for the entire system”.

Finance Minister Peer Steinbrueck said in a joint statement that German taxpayers need not worry about “a single euro of their deposits” in the crisis.

Meanwhile two of Germany’s biggest private banks, Deutsche Bank and Commerzbank, said their liquidity needs were covered through the end of the year.

Private savings is a particularly sensitive issue in Germany which has one of the highest savings rates in the developed world and where memories of the Great Depression and the ensuing rise of the Nazis are still alive.

Interior Minister Wolfgang Schaeuble even invoked that history as he warned of the potential political repercussions that could follow the current world financial crisis.

“We learned from the worldwide economic crisis of the 1920s (and 1930s) that an economic crisis can result in an incredible threat for all of society,” he was quoted as saying in an advance copy of Der Spiegel’s Monday edition.

“The consequences of that depression was Adolf Hitler and, indirectly, World War II and Auschwitz.”

Last year, Germans set aside some 11 percent of their disposable income, mainly for retirement, according to the Association of German Banks.

The blanket protection resembled an emergency law passed by Ireland Friday providing an unlimited guarantee on bank deposits. But the German plan only covers individual savings and checking accounts.

Merkel had sharply criticised Ireland’s go-it-alone plan after crisis talks in Paris Saturday with the leaders of France, Britain and Italy.

“We have already asked the European Commission and the European Central Bank to try to talk to Ireland,” she said. “It is important to act in a balanced way, and for countries not to cause harm to each other.”

German law foresees a 90-percent guarantee for private deposits capped at €20,000euros ($28,000). All savings accounts are normally fully covered by federal deposit insurance.

But the savings deposit insurance fund of the Association of German Banks was hit by heavy losses linked to the bankruptcy of US investment bank Lehman Brothers in September.

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Cashless Switzerland: What is Twint and how does it work?

If you live in Switzerland, you are likely no stranger to Twint and maybe even use it regularly to make and receive payments. But if you are not familiar with this app, this is what you should know.

Twint app can be installed on a mobile phone.
“Twinting” money with a smartphone is easy and convenient. Photo by Andrea Piacquadio from Pexels

In Switzerland, the word “Twint” is used both as a noun and a verb.

As a noun, it describes the mobile application which allows you to pay for various goods and services practically everywhere in the country.

As a verb, (“to twint”), it means to send someone money, or receive it, via the same app.

So what exactly is Twint?

Simply put, it is digital cash (not to be confused with bitcoin, which is digital currency) that was first introduced in Switzerland in 2014 and has become very popular since then.

Twint logo. Image by Twint.ch

People like it because it is an easy and quick way to make instantaneous payments, especially in situations when credit cards or physical cash can’t be used.

A big part of its convenience is that it can be used at cash registers, vending machines and parking meters, as well as in online shops — pretty much everywhere in Switzerland, even in places that don’t accept credit cards.

The only similar mode of payment would be your maestro debit card issued by your bank.

This video explains exactly how the process works.

Another advantage of Twint is that you can use it to send money to someone else’s mobile phone — as long as they also have Twint. And you can receive money the same way.

And there are no fees or charges for this service.

How does Twint work?

Anyone can use Twint, but you need a Swiss bank account or a credit card and, of course, a smartphone.

According to Twint website, you need a smartphone with either an iOS (from version 12.2 and upwards) or Android (from version 7 and upwards) operating system and Bluetooth capability (from version 4.0 and upwards).

“It is generally not possible for Twint to be used on Apple devices with an operating system older than “iOS 12.2” or on Android devices with an operating system older than “Android 7”. On Android devices without access to the Google Play Store (e.g. on certain HUAWEI models), the use of Twint app is also not possible”.

But If you have a compatible phone, installing Twint is easy.

Swiss banks offer their own version of the app, and you can download it directly from your bank’s website.

Then, when you use Twint to make a payment, the amount is debited directly from your bank account or credit card.

By the same token, if you receive payment from another Twint user, the money is automatically deposited in your account.

And you are not limited to just one Twint app.

If you have accounts is several banks, or have more than one credit card, you can install and use all of them.

READ MORE: How to open a bank account in Switzerland

Can Twint be used to make payments and receive money from abroad?

For the moment, Twint can be used solely in Switzerland and payments can be made only in Swiss francs – although this may change in future. 

“We are, however, working closely with providers in other countries to develop an international and multi-currency solution”, according to Twint website.

You can find more information about Twint here.

READ MORE: Which bank is best for Americans in Switzerland?

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