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EU leaders draw up joint plan for weathering financial storm - 13/10/2008

Pile of euro coins © Corbis

The agreement came in Paris at an emergency summit of the 15 euro countries. Leaders of all 27 EU governments are expected to examine the plan when they meet in Brussels on 15 October.

The financial crisis, which began in the United States, has taken a heavy toll on Europe over the past two weeks. Many EU countries have had to step in to support banks in difficulty.

The European Central Bank has injected billions of euros into the cash-starved system, and to reassure people, EU governments have raised the ceiling on deposits they are willing to guarantee. Despite these efforts, the European markets saw some of the most turbulent days in their history last week.

The EU leaders pledged to coordinate national efforts to prop up banks and protect depositors and to increase the flow of credit. Under the plan, national governments would buy into banks to boost their finances and temporarily guarantee bank refinancing to ease the credit crunch.

They agreed on banking guarantees lasting until December 2009, along with inter-bank loans. And they are also willing to underwrite new loans of up to five years.

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