(BRATISLAVA) - Slovakia said Wenesday it would guarantee all personnal bank deposits following a string of state rescues of European lenders in response to deepening world financial turmoil.

"The Slovak government views the (local) banking sector as safe. We are reacting to recommendations of (European Union economic and finance ministers) and to the situation in EU countries," Prime Minister Robert Fico said after a cabinet meeting.

The government's proposal will be discussed by parliament at a meeting later this month. Currently, the state guarantees 90 percent of private banks deposits up to 20,000 euros.

"We are getting rid of depositors' participation and we'll provide an unlimited guarantee," Fico said.

The Slovak central bank (NBS) has not changed its key interest rate, which has remained unchanged at 4.25 percent since April 2007.

But some analysts believe that the NBS will likely cut the key rate by 0.5 percentage points at the end of the month following coordinated interest rate cuts by leading central banks on Wednesday.

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