Article published on the 2008-10-11 Latest update 2008-10-12 09:08 TU
(Left to right) European commissioner for monetary affairs, Joaquin Almunia and finance ministers Alistair Darling of Britain, Christine Lagarde of France, Peer Steinbruck of Germany and Tommaso Padoa-Schioppa of Italy.
(Photo : Reuters)
Leaders of the Eurozone countries – the 15 states that use the euro – are to meet in Paris Sunday to discuss their strategy after this week’s record losses. But after last week’s lukewarm meeting between the leaders of Europe’s four biggest economies, the direction of the response remains unclear.
The United States and British bailout packages already announced did little to stem this week’s losses worldwide. Europe’s choice about which path to follow could determine its financial fate.
In the US, Treasury Secretary Henry Paulson said he would use some of the 700 billion dollars (517 billion euros) allotted by congress to save the backing industry to buy direct stakes in banks, something that has not been done there since the Great Depression.
In Britain, the government announced that it would not let a single bank fail, in an attempt to preemptively bolster investor confidence.
Prime Minister Gordon Brown said Wednesday that his government would guarantee inter-bank lending to encourage credit markets. He also announced that the government would use 50 billion pounds (64 billion euros) of public funds to buy shares in some of Britain’s biggest banks, and majority shares in two, the Royal Bank of Scotland and HBOS.
Around the world, the idea of coordinating responses internationally is gaining traction, leading to Wednesday’s half-point interest rate cut by six of the world’s major central banks.
On Saturday, China joined the initiative stating that its central bank would start working with others to manage the crisis.
On Friday, Finance ministers from the G7 nations released a five-point “action plan” in Washington that outlined the principals that would guide their response to the crisis, but avoided proposing any specific measures.
After that meeting, French Finance Minister Christine Lagarde said that the Eurozone plan would follow the principles laid out by the G7, and might go “well beyond” it.
2008-10-10 14:03 TU
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