In their most unified response yet to the global financial crisis, governments across Europe have decided to put up 1.7 trillion euros as sureties for their respective banks.
German Chancellor Angela Merkel, left, French President Nicolas Sarkozy, center, and British Prime Minister Gordon Brown, right, attend a financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris Sunday, Oct. 12, 2008. [AP]
Britain, Germany, France, Italy and several other EU economies have announced cash guarantees and other emergency measures to save the banking system.
Britain waded in with 37 billion pounds of cash to save three major banks: the Royal Bank of Scotland, HBOS, and Lloyds TSB.
The move, which made the British government these banks' main shareholder, is only the start of Britain's rescue plan for banks. The government has earmarked 50 billion pounds for financial institutions in return for shares.
Gordon Brown, British Prime Minister, said, "In extraordinary times with financial markets ceasing to work, the government cannot just leave people on their own to be buffeted about. For savers, for small businesses, and for homeowners, we must in an uncertain and unstable world be the rock of stability upon which British people can depend."
The German cabinet, meanwhile, approved a rescue package that will provide 400 billion euros in bank guarantees, plus a further 100 billion euros in state funds, to recapitalize banks.
Angela Merkel, German Chancellor, said, "They have one goal. They should create new trust. Trust between banks, trust in the economy, trust of citizens. Trust is the currency which is used to pay. We had and still have to deal with the excesses in the markets. It is the state's job in a social market economy to control this. The state is the guardian of order. "
The French government says it will provide up to 320 billion euros to guarantee bank refinancing, and another 40 billion euros in state funds to recapitalize banks.
The Italian government also put together a rescue package for the country's financial system. But Rome hasn't set aside a specific amount, as other European countries have done.
Other euro-zone countries also announced similar plans on Monday.
The drastic steps came after governments in Europe promised a coordinated rescue effort at an emergency summit in Paris on Sunday.
(CCTV October 14, 2008)