AU$4b frozen following Australian mortgage trust runs
24th Oct 08, 3:54pm
The consequences of Australia's new Deposit Guarantee Scheme continue to unfold as eight Australian funds worth a combined AUS$4 billion were frozen. The promoters of the funds, Perpetual and AXA, were forced to freeze redemption requests from these funds, which are not guaranteed under the new Australian guarantee scheme. Australian media have been talking about the chaos created by the Australian Deposit Guarantee Scheme as cash has been quickly taken out of non-guaranteed funds for the safety of those covered by the scheme. Commenting on the Australian scheme, RBA Governor Glenn Stevens said: "The problem we face is that the sudden (and substantially irrational) surge in demand for guaranteed instruments is creating or is about to create serious dislocation in the financial system." Perpetual were forced to freeze six funds, affecting 40,000 investors. AXA froze its Wholesale Monthly Income Fund and Australian Monthly Income Fund.