Leaders from the eurozone countries hammered out an action plan in a joint response to the unfolding financial crisis at their first ever summit in Paris Sunday.
The financial crisis "needs concrete measures and unity. That is what we have today," French President Nicolas Sarkozy, who hosted the emergency summit with his counterparts from the other 14 eurozone members, said at a press conference.
(From L) Belgium's Prime Minister Yves Leterme, Austria's Federal Chancellor Alfred Gusenbauer, Germany's Federal chancellor Angela Merkel, France's President and current European Union president Nicolas Sarkozy, French Prime Minister Francois Fillon, European Commission President Jose Manuel Barroso, Luxembourg's Prime Minister Jean-Claude Juncker and European Central Bank President Jean-Claude Trichet pose for a family picture ahead of a financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris on October 12, 2008. The summit aims to define a joint action plan for the eurozone and the European Central Bank in relation to the current financial crisis. [Xinhua Photo]
In a joint declaration after the summit, eurozone leaders pledged to "act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system, aiming at restoring appropriate and efficient financing conditions for the economy."
Among those agreed measures, Sarkozy said governments, acting on national basis, would buy into banks to boost their finances and temporarily guarantee bank refinancing to ease the credit crunch.
Eurozone leaders said each member state would recapitalize financial institutions by acquiring preferred shares or other instruments including non-dilutive ones.
In a bid to relieve funding problems of liquidity constrained solvent banks, the declaration said the governments would guarantee "for an interim period and on appropriate commercial terms" new debt issued by banks for up to five years.
"This scheme would be limited in amount, temporary and will be applied under close scrutiny of financial authorities until Dec. 31, 2009," it said.
But Sarkozy warned the measure taken by the leaders is "not a gift to banks."
"Banks need to be loaned money," he said. "So that this confidence is restored, states will have the possibility to guarantee the loans that banks take out, guarantee them under different forms."
(Xinhua News Agency October 13, 2008)