In Copenhagen, the Economy Ministry said commercial lenders had agreed to contribute up to 35 billion kroner ($6.4 billion) over two years to a fund that will help insure account holders from losses, AP reported.
In neighboring Sweden, the government said it would raise the limit for deposit insurance to 500,000 kronor ($71,000) from 250,000 kronor ($35,500).
"The measure is about ensuring that bank customers have continued confidence in the financial system," finance minister Anders Borg and capital markets' minister Mats Odell said in a joint statement.
The decisions come after Germany sought to allay fears about the financial meltdown, enhancing a rescue plan for Hypo Real Estate AG and guaranteeing private bank accounts.
GERMANY EYES SHIELD
Germany also said on Monday it was considering a nationwide "umbrella" to shield its banking sector from market turmoil, a reversal in policy which underscored growing government concerns about financial contagion.
A day after
In recent days,
But Steinbrueck reversed course on Monday: "I am very much aware that at some point individual solutions are no longer enough," he told reporters in
As he spoke, concerns about the health of the banking sector sent European stocks plunging 5 percent.
Hypo Real Estate stock was down 30 percent despite an agreement by banks and insurers on Sunday to extend 15 billion euros in new liquidity to the Munich-based lender. Commerzbank was another big loser, down 13 percent.
Steinbrueck said uncertainty in the market raised questions about whether
Berlin was forced to call together officials from the Bundesbank, Bafin financial regulator, banking and insurance industry on Sunday to agree the guarantees after new refinancing problems at the Munich-based firm came to light, making a 35 billion ($47.57 billion) euro rescue agreed last week obsolete.
Steinbrueck defended the new Hypo rescue, which came after financial firms threatened to pull out of the original scheme. He said the firm's collapse would have meant a conflagration across the banking sector.
Two financial sources said on Monday that Hypo's chief executive and chairman, sharply criticized by the government, were expected to resign within days.
Merkel and Steinbrueck announced on Sunday a new federal guarantee for private savings deposits, a move they said was meant to reassure a public spooked by daily headlines of financial turmoil.
"It was a signal from the Chancellor and me, that savers understand they mustn't be worried about their savings," Steinbrueck said. "That's important in this situation because we don't want them to run to their banks filled with fear and withdraw money."
But Berliners were mostly dismissive of the move.
"It's totally unrealistic, a feeble attempt by the government to stop a vicious cycle of people panicking, withdrawing their money and making the situation even worse," Judith Trauben, a 54-year old housewife, walking near the Reichstag building in central Berlin told Reuters.
Steinbrueck said finance ministers from
He said he would be unable to attend a meeting of euro zone finance ministers on Monday in