1. With effect from 1st October 2008, the savings of individual persons should be guaranteed in their entirety. This benefits savers, secures confidence in the Austrian banks and avoids locational disadvantages to other states, particularly Germany.

2. Large-scale speculative short sales of stocks, so-called “naked short selling”, can have an additional negative impact on stock market development and companies in crisis times. Therefore, by a reform of the Stock Exchange Act, the Financial Market Authority (FMA) shall be given the right to order temporary restrictions of naked short sales if required and to sanction infringements to the highest possible degree.

3. The procedure laid out in the Federal Law on Banking (Bankwesengesetz) with which the FMA banks can regulate equity capital bonuses, should be simplified to increase the preventative application of this tool. This would be an additional contribution to risk management in the banking sector. However, to further increase the efficiency of the FMA, the public liability regulations require an urgently needed modification in order to prevent the endangerment of rapid and definitive monitoring in the public interest.

4. To support the measures of the central banks, we suggest the establishment of a liquidity clearing house, which is either settled directly with the central bank or with a commercial bank, such as the Oesterreichische Kontrollbank AG. Banks, which have superfluous liquidity, will provide this to the clearing house. On its part, the clearing house will pass this liquidity on to affiliated credit institutions for long-term periods. In order to create confidence and liquidity in the system, the government will take over the liability for the peak demand of the clearing house so that it may borrow additional liquidity from the market.

5. The conditions enabling the government to directly or indirectly take over the liability for the longer-term liquidity demand of credit institutions must also be created. A direct measure would be the assumption of liability for a longer-term bank issue against payment of liability remuneration; indirectly this would be the guarantee of a facility provided by the central bank. Germany has shown a way here whereby the Bundesbank takes in unmarketable assets as a security and the state safeguards write-offs from this.

6. To maintain financial market stability, it can be necessary in crisis times that the state itself provides support and contributes through the tools available to it to maintain stability. Using the provision of liquidity, special situations can create the demand to subscribe to equity in banks or to guarantee receivables that are no longer valuable. In the past with the BAWAG-P.S.K. Sicherungsgesetz (a law providing financial guarantee worth €900 million to BAWAG-P.S.K.), Austria has already shown that it is in the position to quickly realise a solution which is efficient for the bank and the market and agreeable for the taxpayer. Therefore, a new legislative suggestion would be prepared which made it possible to provide equity in the sense of the Federal Law on Banking and to take over guarantees and liabilities when required.

7. In Spring 2008, a workgroup set up in the Federal Ministry for Finance, in which all relevant institutions were represented, made suggestions to improve the Austrian investor compensation. The aim was to strengthen the capacity of the investor compensation and to limit the risk of compensation cases. The focal point of the paper suggested by the workgroup and created by the BMF is the ex-ante financing of the investor compensation scheme, whereby parts of the contributions are fed into the accounts of an insurance premium in order to achieve an asset structure and adequate amount of cover. Furthermore, there should be the option of levying special contributions in larger claims if required. As part of the total package of measures to stabilise the financial market, a government contribution to finance the investor compensation scheme is then facilitated as it becomes established in the deposit guarantee.