Australia will end its bank deposit and bank funding guarantees from the end of March, because they were no longer needed with the world recovering from the global downturn, Treasurer Wayne Swan said on Sunday,
The withdrawal is the latest move to lift crisis measures brought in during the global downturn and which helped Australia avoid recession.
Australia's central bank has lifted interest rates three times since last October to 3.75% from what it said were emergency levels.
The government has also been spending A$ 52 billion on major building and infrastructure to stimulate the economy, but has rejected calls from opposition lawmakers to wind back the spending as the economy rebounds.
Swan said the national government would also remove guarantees on state government borrowings by the end of 2010, giving states extra time to secure liquidity for new un-guaranteed bond lines.
Swan said the decision to remove the guarantees was based on advice from the Australian Council of Financial Regulators, which includes Australia's central bank boss and the head of Treasury, as well a key financial market regulator.
"The council has advised that bank funding conditions have improved such that the guarantee is no longer needed," he said, adding the removal should not lead to higher funding costs.
The guarantees, among the most world's most comprehensive when they were announced in October 2008 as the global financial crisis hit, were designed to ensure Australian banks maintained access to international funds.
But Swan said it was appropriate to withdraw the guarantees due to the strength of Australia's financial system compared to other G-20 countries which have either removed their guarantees, or which plan to do so soon.
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