##actively from october 1, 2008 ; this guarantee will be valid until the end of 2009. as of january 1, 2010, protection for retail customers ’ deposits will be limited to eur 100. 000 ( previously eur 20. 000 per account holder / per bank ). the deposit protection for small and medium - size enterprises was raised to eur 50. 000. overall, a maximum of eur 10 billion has been allotted to this measure. all these measures, adopted in a swift and comprehensive way, contributed successfully to reestablishing confidence in the austrian financial market and to securing financial stability. when comparing the austrian bank stabilization package with those of other countries, the austrian package was initially criticized as being oversized. but in fact, the dimension of the package was already taking the new risk development in the cesee countries ( where austrian banks have a high exposure ) into account and proved to be the result of prudent foresight. moreover, compared with the banking systems in other countries ( u. s. a., germany, u. k. etc. ), where public rescue packages play a key role in guaranteeing the survival of the banking system, it is particularly worth noting that the austrian banking system is still generating profits. the austrian banking support package can be described as a vaccination against potential future problems. the financial crisis has become a global economic crisis. given the scope of the current crises, several arguments in favor of discretionary fiscal policy have been put forward. first, since the output gap is expected to remain negative for a longer period of time, the well - known implementation lag of discretionary fiscal policy is currently less problematic. second, in " normal " times, fiscal policy supports monetary policy in smoothing the business cycle via automatic stabilizers. this has worked quite well over the last 25 years. yet, these are not " normal " times. although automatic stabilizers still work, they are not large enough to prevent a severe economic downturn. moreover, they have been weakened through structural reforms like reductions in the progressivity of tax systems and a decrease in the public expenditure - to - gdp ratio. third, due to the financial crisis and very low expectations on returns of potential investments for the near future, right now the ability of traditional monetary policy measures to boost investment and consumption is limited. finally, we face the threat of hysteresis effects ( increase in nairu ) via a long - run reduction in human capital. so there is

capital accounts, triggering the need for massive financial support. 2. the reaction of austrian economic policy the austrian bank stabilization package was passed by the austrian parliament in october 2008 and primarily encompasses two new laws, the interbank market support act ( interbankmarktstarkungsg ), and the financial market stability act ( finanzmarktstabilitatsg ). the austrian measures were designed in accordance with the common principles highlighted at the ecofin meeting on october 7, 2008, and the declaration on a concerted european action plan by the heads of state of the euro area on october 12, 2008. this declaration, which defines specific cornerstones regarding national measures for supporting the financial markets, shows that the european union is in a position to act quickly and in a coordinated manner in the case of a financial crisis. with the interbank market support act, an " austrian clearing bank " ( oesterreichische clearingbank ag ) was established as a special purpose entity to strengthen the interbank market and to guarantee bank bonds. the austrian clearing bank serves as an intermediary on the interbank market by borrowing funds from credit institutions and lending them on to other credit institutions and insurance undertakings. measures under this law may not exceed eur 75 billion. the interbank market support act expires on december 31, 2009. up to now, bank bonds to the amount of eur 11. 1 billon have been guaranteed by the austrian government, while guarantees given in the interbank market amount to eur 5. 3 billion. under the financial market stability act, the minister of finance may take measures to recapitalize credit institutions and insurance undertakings by way of assuming liabilities, guaranteeing loans and providing equity capital, acquiring company shares or convertible bonds, taking over company assets and – as a measure of last resort – taking over property rights ( i. e. nationalization ). fees and interest for these instruments must be set at market rates. measures under this law may not exceed eur 15 billion. the law also provides for ( re ) privatization after stabilization has been achieved. up to now, agreed capital measures amount to eur 6. 35 billion, leaving a buffer of eur 8. 65 billion for further recapitalization measures in the future. another measure taken by the austrian authorities concerns the safeguarding of bank deposits and the prevention of bank runs. for bank deposits of retail customers, a 100 % state guarantee was put in place retro