European Nations Agree to Guarantee Bank Debt

PRLog (Press Release) – Oct 13, 2008 – In an attempt to thaw the global credit freeze and restore investor confidence, European countries that share the euro currency agreed on Sunday to guarantee new debts and recapitalize important banks that are in distress.

While talking about the unified European response to the financial crisis, French President, Nicholas Sarkozy said at a press conference, “We need concrete measures. We need unity, which is what we achieved. None of our countries acting alone could end this crisis.”

The European leaders agreed on several measures to strengthen the financial markets. The key measures announced were: a pledge to guarantee new bank debt until the end of 2009, permit governments to help banks while buying bank stakes, and a promise to recapitalize critical banks in distress.

While no figure has been put to the bank rescue effort, governments of Italy, Germany, France and others are expected to present their individual plans and financial package details on Monday. The rest of the 27-member EU will have a chance to sign up to the measures when the countries meet on Wednesday.

President Sarkozy also called for a summit of major world economies to rebuild the roiled international financial system.  

Following the announcement by EU nations, the euro rose the most on Monday in three weeks against the dollar.