End of bank guarantee signals Australian economic growth

The move, which was taken "on the advice of the Council of Financial Regulators", is a result of the strong turnaround that the Australian economy has went through in recent times, rendering it healthy enough to abort the scheme earlier than anticipated.

Swan paid credit to the role that the scheme, known as the 'The Guarantee', had played to help the Australian economy weather the storm during a global economic crisis that had inflicted much damage to other economies across the world; stating that that absence of the scheme would have lead to lower growth and higher unemployment.

The move is also partly due to the growing concerns that the Reserve Bank and its institutions would need to stand on their own credit in order to continue funding.

Along with 'The Guarantee', Swan also announced the termination of the Guarantee of State and Territory Borrowing, a scheme that has enabled state and territory governments to commit to nation building investments.

Swan however confirmed that the decision to abort the scheme wouldn't affect the Financial Claims Scheme, which provides certainty for more than 16 million Australians over their deposits.

The Financial Claims scheme will be reviewed in October 2011, Swan added.