FRANKFURT, Germany – The German government on Monday defended its pledge to guarantee personal savings amid ongoing market turbulence as “an important step at the right moment.”

In a joint statement, Chancellor Angela Merkel and Finance Minister Peer Steinbrueck said the government would guarantee private bank accounts, and some 568 billion euros ($785 billion) in personal savings and checking accounts as well as time deposits, or CDs.

Finance Ministry spokesman Torsten Albig said the sums in all three categories were “certain to be more than a thousand billion,” or a trillion.

The statement lacked concrete details, but Merkel's spokesman, Ulrich Wilhelm, said it was aimed at quelling fears that individuals' savings could be wiped out. He said the plan was meant to address fears among investors about whether and to what extent reports of unrest and collapse in financial markets were justified.

Wilhelm said the government felt it was time for such a pledge, coming as it did over the weekend in tandem with the government's announcement of its second bailout plan for Hypo Real Estate AG in as many weeks.

“The basis of any financial system is trust,” Wilhelm said. “And the declaration of the government strengthens the trust of private investors, citizens, that their private deposits are secure and we believe it will have a measurable stabilizing effect on our financial system.”

Although it lacked specifics, the federal government said as part of the pledge it would work with financial institutions and their insuring agencies to guarantee the accounts.

“I think it was an important step at the right moment, to definitively assure people that their savings are secure and that no account holder here will lose their investment,” Wilhelm said.

Steinbrueck said the plan was meant to soothe financial markets, although stocks fell sharply once again on Monday.

Germany's benchmark blue-chip DAX 30 was down nearly 6 percent with financial stocks leading the decliners. The case was similar in neighboring Switzerland and Austria, even as central banks around Europe continued to support the banking system's liquidity with billions of dollars in short-term loans.

Meanwhile, Berlin was quick to counter any parallels between its pledge on deposits and the sweeping action taken last week in Ireland to insure savings there, as well as interbank loans. Irish President Mary McAleese signed into law a bank-guarantee bill, granting taxpayer protection to all deposits and debts of Irish-owned banks, worth some 440 billion euros ($600 billion).

“In Ireland, guarantees were given to banks themselves ... we are talking about covering private investors, savings,” Wilhelm said.

“Over the past week a political consensus developed within the government that in the case of serious alarm, we should act politically to guarantee the savings of private account holders.”

The move came after Merkel's government this weekend announced a new bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, Germany's second-biggest commercial property lender.

In Brussels, the European Commission was initially positive over Merkel's statement, saying that Berlin had informed Brussels before the chancellor made it public.

British Prime Minister Gordon Brown is expected to hold telephone talks with German Chancellor Angela Merkel on Europe's financial crisis later Monday, the British leader's office said.

Danica Kirka in London and Patrick McGroarty in Berlin contributed to this report.