(LUXEMBOURG) - European finance ministers agreed Tuesday to increase minimum bank deposit guarantees in Europe to 50,000 euros (67,500 dollars) from 20,000 euros currently.

"We finally reached a solution that will have the result of raising the guarantee to 50,000 euros for everyone," Spanish Finance Minister Pedro Solbes said after a meeting with EU counterparts in Luxembourg.

The agreement fell short of a minimum level of 100,000 euros that had been mooted prior to the meeting amid concerns in poorer Eastern European countries that would have struggled to meet that obligation.

"There is a whole series of countries -- I would say the majority -- which (shared) our preference to set a minimum of 100,000 euros," Solbes said.

He said the accord, which is to last initially for one year, was an informal political agreement and that it would be up to each member state to enact it according to national procedures.

Although the action was less ambitious than expected, it marked the first concrete EU-wide concerted action against the crisis after a series of countries took individual steps to protect savers.

In the absence of EU-wide action, a growing number of European countries had unilaterally rushed to raise their minimum guarantee on bank deposits in the hope of boosting confidence.

Currently EU law requires member states to guarantee savers' deposits to at least 20,000 euros in case a bank goes bust although some states have long offered much higher protection.

After Germany offered a blanket guarantee on bank deposits on Sunday, Austria, Britain, Denmark, France, Portugal, Spain and Sweden indicated they had similar plans in the works.

Ireland triggered the rush last week by offering an unlimited guarantee on all deposits at its biggest banks.

However, Ireland has come under fire from its EU partners for the move because it covers not only individual savers' deposits but a wide range of liabilities held by the country's six biggest banks.

The scope of the blanket guarantee has irritated other EU countries, which fear that it will give Irish banks an unfair advantage over their European rivals.

It also raised concerns that it could encourage people to flock to Ireland to park cash in Irish accounts, causing deposits to flow out of banks elsewhere in Europe.

Economic and Financial Affairs Council (ECOFIN)

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