Madrid - Spain will increase its guarantees for bank deposits from 20,000 to 100,000 euros (27,000 to 137,000 dollars) per account holder and bank, Prime Minister Jose Luis Rodriguez Zapatero announced Tuesday.

Zapatero also announced the creation of a government fund of 30 billion euros to guarantee liquidity to the financial system through the purchase of "maximum quality" and "non-toxic" assets from banks.

The fund can be increased to a maximum of 50 billion euros.

Spain's banking system has so far been deemed solid enough to cope with the international financial crisis.

But banks are also facing liquidity problems as the country's biggest economic crisis in over a decade, caused partly by the meltdown of the key property sector, is deepening.

Zapatero's announcement followed a meeting with bank executives on Monday.

The premier was scheduled to meet with representatives of trade unions and employers later on Tuesday. (dpa)