bwhhisc
13th October 2008, 12:10 AM
Article: Euro nations to guarantee bank refinancing.
PARIS - Nations in Europe's single-currency zone agreed Sunday to temporarily guarantee bank refinancing and pledged to prevent banks failing as part of a raft of emergency measures designed to get credit flowing again.
It was Europe's most unified response so far to the global financial crisis and addresses a key part of the problem: banks' reluctance to lend to each other. That has helped fuel the crisis that has pulled down some of Wall Street's most storied names and is threatening the core of the U.S. and European economies. After the Dow Jones industrial average ended its worst week in history, plummeting more than 18 percent last week, world leaders scrambled all weekend for a way to unblock money markets before they open Monday.
At an emergency summit of leaders of the 15 euro-zone countries in Paris on Sunday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion. But it stopped short of a one-size-fits-all solution: It's up to individual governments to announce how they will implement the measures. "I want to tell our compatriots in all the countries of Europe that they can and should have confidence," summit host French President Nicolas Sarkozy said. Sarkozy hoped the momentum from Sunday's meeting wouldn't stop at Europe's borders, and renewed his call for a summit of major world economies to help rebuild an international financial system "to make European ideas triumph." European Central Bank Chief Jean-Claude Trichet welcomed the unity of Europe's leaders — but warned there is more work to do. "The force of unity that we showed today is a fundamental element of confidence," said European Central Bank Chief Jean-Claude Trichet. But "there are still many things to do," both by governments and central bankers, Trichet added. European Commission President Jose Manuel Barroso said: "Our analysis isn't of an immediate miracle."
The plan follows Britain's 50 billion-pound ($88 billion) plan to partly nationalize major banks and promised to guarantee a further 250 billion pounds ($438 billion) of loans to shore up the banking sector. But there was no sum given on how much the EU measures would cost, and Sarkozy said each country would decide how much it would spend. British Prime Minister Gordon Brown, who met with Sarkozy earlier Sunday, said: "I believe that there is common ground now about what needs to be done, that it has to be comprehensive, and it has to be all countries working together to get to the bottom and solve what is a global financial problem." Sarkozy said the measures — which also include new accounting rules for banks — will be enacted "without delay" in the 15 countries using the euro.
On Monday, the governments of Italy, Germany, France and others will present their individual ways of implementing the measures. The rest of the 27-member EU will have a chance to sign up to the measures when the countries meet Wednesday.
The statement by EU leaders said they agreed to "avoid the failure of relevant financial institutions, through appropriate means including recapitalization." Governments would guarantee "for an interim period and on appropriate commercial terms" new debt issued by banks for up to five years.
http://news.yahoo.com/s/ap/20081012/ap_on_bi_ge/eu_europe_crisis_summit
IMO...glad to see some quick response rather than a bunch of rhetoric.
PARIS - Nations in Europe's single-currency zone agreed Sunday to temporarily guarantee bank refinancing and pledged to prevent banks failing as part of a raft of emergency measures designed to get credit flowing again.
It was Europe's most unified response so far to the global financial crisis and addresses a key part of the problem: banks' reluctance to lend to each other. That has helped fuel the crisis that has pulled down some of Wall Street's most storied names and is threatening the core of the U.S. and European economies. After the Dow Jones industrial average ended its worst week in history, plummeting more than 18 percent last week, world leaders scrambled all weekend for a way to unblock money markets before they open Monday.
At an emergency summit of leaders of the 15 euro-zone countries in Paris on Sunday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion. But it stopped short of a one-size-fits-all solution: It's up to individual governments to announce how they will implement the measures. "I want to tell our compatriots in all the countries of Europe that they can and should have confidence," summit host French President Nicolas Sarkozy said. Sarkozy hoped the momentum from Sunday's meeting wouldn't stop at Europe's borders, and renewed his call for a summit of major world economies to help rebuild an international financial system "to make European ideas triumph." European Central Bank Chief Jean-Claude Trichet welcomed the unity of Europe's leaders — but warned there is more work to do. "The force of unity that we showed today is a fundamental element of confidence," said European Central Bank Chief Jean-Claude Trichet. But "there are still many things to do," both by governments and central bankers, Trichet added. European Commission President Jose Manuel Barroso said: "Our analysis isn't of an immediate miracle."
The plan follows Britain's 50 billion-pound ($88 billion) plan to partly nationalize major banks and promised to guarantee a further 250 billion pounds ($438 billion) of loans to shore up the banking sector. But there was no sum given on how much the EU measures would cost, and Sarkozy said each country would decide how much it would spend. British Prime Minister Gordon Brown, who met with Sarkozy earlier Sunday, said: "I believe that there is common ground now about what needs to be done, that it has to be comprehensive, and it has to be all countries working together to get to the bottom and solve what is a global financial problem." Sarkozy said the measures — which also include new accounting rules for banks — will be enacted "without delay" in the 15 countries using the euro.
On Monday, the governments of Italy, Germany, France and others will present their individual ways of implementing the measures. The rest of the 27-member EU will have a chance to sign up to the measures when the countries meet Wednesday.
The statement by EU leaders said they agreed to "avoid the failure of relevant financial institutions, through appropriate means including recapitalization." Governments would guarantee "for an interim period and on appropriate commercial terms" new debt issued by banks for up to five years.
http://news.yahoo.com/s/ap/20081012/ap_on_bi_ge/eu_europe_crisis_summit
IMO...glad to see some quick response rather than a bunch of rhetoric.