EU Leaders Agree Bailout

EU politicians and financial executives have agreed to inject billions of euros into banks in an effort to stabilize and restore confidence in the world financial system.

The basic plan follows that of Britain', with the governments taking direct equity stakes in distressed banks and guaranteeing bank lending for up to five years. France and Germany are expected to release national packages worth billions of Euros on Monday. Some figures have been bandied about, Germany is considering a plan to inject 50 billion to 100 billion euros into its banks, with a price tag for all of the new measures reaching as much as 400 billion euros, or $536 billion, according to a person briefed on the government’s work.


“The meeting that we had was exceptional,” President Nicolas Sarkozy of France, said at a news conference. “We need concrete measures, we need unity. That’s what we achieved. The plan on which we agreed today will be applied in all our respective states.”

The Belgian finance minister, Didier Reynders, said, “We are committed in all European states to recapitalize banks if we establish a threat to solvency and a risk to the economy....The goal is to kick-start the interbank lending market,” he said.

Additionally unfreezing the commercial paper market used by companies to finance their businesses, is to be an aim of the plan.

Contrary to Britain or the US, a price tag has not been put on the rescue package.

“Our goal is to have coordinated action for the euro zone,” Angela Merkel, the German chancellor, said, and the meeting “is a very important signal for the strength of the euro zone.”