World

Europe leaders agree on bank rescue plan

by Dave Keating | October 13, 2008 at 07:59 am

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At long last, European leaders have come up with a coordinated EU response to the banking crisis. Or have they? The leaders of the 15 nations in the eurozone have announced a Europe-wide plan to deal with the crisis, but each country will still act on its own, but "coordinating" with the others. It's not imediately clear what "coordinating" means.

The Eurozone only includes the countries that use the Euro and therefor does not include the new 2002 EU entrants, Scandinavia, or the UK - which announced a massive bank takeover today.

European leaders agreed Sunday on a coordinated rescue plan to guarantee inter-bank lending, inject cash into the banking sector and take other measures to beat back the crisis caused by the global financial meltdown.

At an emergency summit in Paris on Sunday evening, the leaders of the 15 nations that use the euro currency announced a Europe-wide plan to guide and coordinate packages that will be announced by national governments starting today.

The leaders pledged to work together to prop up banks whose credit activities have been all but frozen in recent days, trying to send a strong message of unity and action before financial markets open today.

The package follows a major British initiative, announced last week, to commit about $87 billion for a partial nationalization of the banking sector. On Friday, U.S. Treasury Secretary Henry M. Paulson unveiled a similar plan to take direct stakes in banks and other financial institutions using a portion of the $700-billion financial bailout package aimed at buying distressed mortgage-backed securities.