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The federal government has said it will leave its bank deposit guarantee in place for another three years.
Treasurer Wayne Swan told The Australian Financial Review that the government would look at the term funding guarantee for banks when global financial conditions begin to normalise.
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Following the collapse of the US investment Bank Lehman Brothers last year, lenders became nervous about lending to non-guaranteed borrowers.
In response, the government introduced wholesale funding guarantees to both large and mid-level banks.
“They have brought great stability and confidence to our financial system,” Mr Swan said.
“The bank guarantee was perhaps one of the most fundamental decisions we took last October, which positioned Australia to deal with this global financial crisis that subsequently became a global recession,” he told the daily.
