ROME, Oct 8, 2008 (AFP) - The Italian government may decide Wednesday to set aside 20 to 30 billion euros (27-41 billion dollars) to support banks if they dip below a certain level of solvency, the ANSA news agency reported.

The fund would either help banks boost their liquidity or be used to buy stakes in at-risk banks, ANSA said, quoting government sources.

The cabinet began an extraordinary meeting to adopt 'urgent measures' to guarantee stability in Italy's banking system on Wednesday evening.

The ministers may also decide to raise deposit guarantees on savings from the current 103,291 euros (141,000 dollars), ANSA said earlier.

Italy has been largely shielded from the knock-on effects of the global financial crisis because its banking sector is mostly retail, relying on ordinary savers' deposits for their business rather than the short term money markets.

However leading bank UniCredit, which has the most foreign exposure among Italian banks, has been hit hard on the Milan stock market and is struggling to reassure investors about its future.