Leaders of the 15-member eurozone are meeting in Paris to address the financial crisis. Before the summit, French President Nicolas Sarkozy met with British PM Gordon Brown whose bank rescue plan provides a possible model.
Fifteen European leaders met in Paris on Sunday to tackle the global financial crisis, with governments being asked to commit themselves to preventing any major banks from collapse.
French President Nicolas Sarkozy, the current head of the European Union, said he hoped to persuade his peers "to speak with one voice" in a desperate effort to contain the worst financial crisis since the 1930s Great Depression.
Under the terms of a draft declaration being discussed, the 15 member states of the eurozone single-currency bloc were to commit themselves to prevent any bank collapse and would step in to recapitalise failing institutions.
"We confirm today our commitment to act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system," according to a copy of the draft statement seen by AFP.
"Governments remain committed to avoid any failure of systemically relevant institutions, through appropriate means including recapitalisation," the statement added.
The draft statement said the countries would also guarantee new medium-term loans between private banks in a bid to kick-start interbank lending, which has ground to a halt since the credit crunch began.
This offer would stand for an "interim period" and would see governments underwriting new loans of up to five years "on appropriate commercial terms" by a variety of means, including issuing securities, the statement said.
Before joining his 14 eurozone colleagues, Sarkozy held bilateral talks with Prime Minister Gordon Brown of Britain -- which does not use the euro currency -- to talk about British plans already unveiled to partially nationalise some of Britain's major banks.
Later at the summit, as he greeted European Commission president Jose Manuel Barroso, who was also taking part in the talks, Sarkozy said he expected a "coordinated, ambitious" plan to contain the financial crisis to emerge from discussions.
"On Wednesday we're going to try to get all of Europe facing in the same coordinated and ambitious direction," he said, referring to this week's Brussels summit of all 27 European Union members.
"That's what I expect: Europe speaking with one voice," he added.
Upon entering the talks, German Chancellor Angela Merkel said the summit would send a "very important signal" to calm down the markets.
"This meeting is to decide on coordinated joint action in the eurozone so that every country in the coming days can put in place measures that stabilise the financial markets," Merkel told reporters.
Financial markets across the world suffered massive losses throughout last week when all efforts to restore confidence appeared to fail.
Brown believes that confidence can only be restored if governments follow his lead in providing funds to not only prop up individual banks, but to free up loans between institutions that keep capital markets moving.
Brown's government has set aside 250 billion pounds (315 billion euros) to guarantee this trade, in addition to 200 billion pounds in short term loans and 50 billion to buy stakes in major banks.
Austria's Chancellor Alfred Gusenbauer said the rest of Europe should follow the lead set by Britain.
"What Britain has done makes good sense and we should follow their experience," he said.
Sarkozy confirmed that there would be an emergency cabinet meeting on Monday to examine a plan to guarantee interbank loans, followed by an address by the president to the nation in which he would "announce a number of measures".
Lawmakers said a law on guaranteeing French banks would go before parliament this week.
And in Germany, Europe's biggest economy, press reports said that Merkel's government would announce after the summit a rescue package worth several hundred billion euros for its banks.
Berlin is expected to guarantee interbank loans with between 300 and 400 billion euros (405 to 540 billion dollars) and to provide banks with fresh capital in exchange for shares in the banks, as in the British plan.
Portugal's finance minister also announced Sunday that his government was offering a 20-billion-euro state guarantee for banks headquartered in that country.
Date created : 2008-10-12