Praha - At an extraordinary session this morning, the Chamber of Deputies approved a cabinet proposal under which the state will guarantee individuals' bank account savings up to EUR 50,000.

Today the Czech Republic only guarantees to compensate 90 percent of savings up to EUR 25,000. But the EU agreed several weeks ago that individual member states should increase guarantees to at least EUR 50,000 to reassure savers during the financial crisis.

Speaking before the lower house vote, Finance Minister Miroslav Kalousek said that the Czech banking system remains stable. "This bill is a reaction to the current situation, although deposits in Czech banks are safe and banks are in good condition," said Kalousek.

"We rather have to prepare for indirect effects of the crisis, including its impact on the economy and unemployment," said Prime Minister Mirek Topolánek after the bill was passed. "Our financial institutions are on a higher level than in [the rest of] the EU."

The opposition Social Democrats (ČSSD) first rejected the proposed banking law amendment, demanding that the guarantees should be increased up to EUR 100,000.

"The guarantee fund would not be able to cover [savings under] their proposal. Besides, the opposition would expose themselves to suspicion that, they are trying to oblige the wealthiest savers," said Topolánek.

In the end the ČSSD supported the cabinet proposal, although the party made it clear that they don't see the EUR 50,000 guarantee as the final solution, but merely a basis for further discussion.