William Tinning and Torquil Crichton

Germany became the biggest European country yet to announce that it would guarantee all private savings accounts during the global financial crisis.

Germany's Chancellor Angela Merkel said no citizen should fear for the safety of their savings as the country was gripped with uncertainty over the future of its second-largest mortgage lender Hypo Real Estate. Hypo was the subject of a joint rescue by the federal government and a consortium of banks at the beginning of last week. That deal fell apart on Saturday when the consortium refused to provide it with fresh liquidity.

There was confusion yesterday over the true scale of the German guarantee. It was put at 568bn (£440bn) by a finance ministry spokesman. That is only slightly above the 420bn (£326bn) guarantee made by Ireland last Tuesday despite the fact that Germany is one of the five biggest economies in the world.

Yesterday's move by Germany increases pressure on Chancellor Alistair Darling to follow suit. Apart from Ireland, Greece also announced a 100% state guarantee last week on personal savings. These moves have been criticised by other EU member governments, including the UK, which fear savers will switch funds to banks offering enhanced protections, further destabilising their own banking systems.

Scotland's First Minister Alex Salmond repeated calls for the UK to guarantee all Sterling deposits in UK financial institutions.

Ironically Hypo's latest difficulties appear to have been caused by problems at its Dublin-based subsidiary Depfa Bank which it acquired last year.

Depfa, which specialises in funding public infrastructure, got into trouble last month after failing to attract much-needed short-term funding. It has, however, failed to win cover from the Irish government's new guarantees. A spokesman for Ireland's department of finance said the government would not help Germany bail out Hypo or its subsidiary.

Mr Darling, meanwhile, is due to make a statement on the economic situation in the House of Commons today. The chancellor has pledged that the government is ready to take "pretty big steps that we wouldn't take in ordinary times" in order to get Britain through the financial crisis.