EU leaders vow to coordinate in tackling financial crisis

www.chinaview.cn 2008-10-05 05:44:31  

·Leaders from EU's four largest economies concluded an emergency summit Saturday. ·The summit is to prompt EU governments to infuse billions of euros to keep banks afloat. ·EU leaders said they would do their utmost to save troubled banks.

    PARIS, Oct. 4 (Xinhua) --

Leaders from the European Union (EU)'s four largest economies concluded an emergency summit here on Saturday, vowing to work in a coordinated way in tackling financial crisis.

    "We will work cooperatively and in a coordinated way within the European Union and with our international partners," leaders from France, Germany, Britain and Italy said in a joint statement.

    The three-hour mini EU summit was called by France, which holds the EU rotating presidency, after several European banks fell prey to the financial crisis in the past week, prompting EU governments to infuse billions of euros to keep them afloat.

    It was also attended by European Commission President Jose Manuel Barroso, European Central Bank chief Jean-Claude Trichet and Eurogroup Chairman Jean-Claude Juncker.

    EU leaders said they would do their utmost to save troubled banks and restore confidence in the financial markets.

    "We jointly commit to ensure the soundness and stability of ourbanking and financial system and will take all the necessary measures to achieve this objective," they said.

    French President Nicolas Sarkozy, who hosted the summit, said he and the other leaders had agreed that governments needed to act in a coordinated manner.

    "Each government will operate with its own methods and means, but in a coordinated manner," Sarkozy said at a joint news conference with others.

Italian Prime Minister Silvio Berlusconi (2nd L) speaks with France's President Nicolas Sarkozy and German Chancellor Angela Merkel (L) as British Prime Minister Gordon Brown answers questions during a news conference following a summit to discuss the international financial crisis at Elysee Palace October 4, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    In the spirit of close coordination, the leaders made it clear that EU governments should take into consideration the potential cross-border effects of their national decisions when tackling the financial crisis, in an obvious reference to Ireland's recent decision to guarantee all the savings at Irish-owned banks.

    The unilateral move by Irish government angered other EU countries, notably Britain, which worried about a flurry of savings withdrawals from their own banks to Irish peers.

    The European Commission, the EU's executive arm, was invited at the summit to present a legislative proposal in the near future on harmonization of EU deposit guarantee schemes.

    Prime Minister Gordon Brown told the same press conference that other leaders supported his call for the early release of 32 billion euros (about 44 billion U.S. dollars) in European funds to help small businesses weather the global finance crisis.

    The money had been committed by EU member states at a meeting of finance ministers in Nice last month, but the British government wanted the European Investment Bank to make those funds available ahead of previous schedule.

    Brown said the governments would continue to assure liquidity and prevent any sound and solvent bank from failing.

    "Where action has to be taken we will continue to do whatever is necessary to preserve the stability of the financial system," Brown said. "The message to families and businesses is that, as our central banks are already doing, liquidity will be assured in order to preserve confidence and stability."

    EU leaders also made a call for restraints on executive pay, strict oversight of credit rating agencies and quick change of accounting rules to ensue European financial institutions are not disadvantaged with their international competitors.

    They said the EU needs to improve supervision structure in dealing with cross-border financial groups.

    In a legislative proposal released on Wednesday to reform the EU banking rules, the European Commission called for the establishment of colleges of supervisors to oversee cross-border institutions.

    EU leaders said the mechanism should be installed immediately.

    They called jointly for a Group of Eight (G8) industrial nations summit as soon as possible to review rules governing financial markets.

    "Go forward, we will work within the EU with our international partners to achieve an effective and comprehensive reform of the global financial system," they said. 

 
Europe's giants united in face of global recession

Russia Today, October 5, 2008, 11:00

The leaders of Europe's four biggest economic powers - Britain, France, Germany and Italy - have come to a consensus on how to deal with the global financial meltdown. They have agreed to work together to support financial institutions, but without forming a joint bailout fund.

Britain, France, Germany and Italy came to the agreement at a meeting in Paris hosted by the French President Nicolas Sarkozy. EU leaders said they would adapt EU budget rules to deal with the financial crisis.

The British Prime Minister Gordon Brown said liquidity will be assured to maintain economic stability.

German Chancellor Angela Merkel said Europe must draw lessons from the financial crisis.

Earlier Sarkozy had said to deal with the crisis, there needed to be consensus.

"A global problem requires a global response. Today's world, Europe has to display the will to find a solution and that will reassure the entire world - the taxpayers, the savers and the clients of our banks," the French president said.

But actions from the leaders can’t come soon enough for many European citizens - they’ve been feeling the pinch for a while.

Deauville on the Normandy coast is traditionally a place for the rich and famous to retreat, for people to holiday among those who like to see and be seen. Except these days there’s no one in the cafes, the hotels have vacancies and the shops are doing far from a brisk business.

In nearby Blonville-sur-Mer, it’s bleaker still. Carola has run a hair and beauty salon in this small picturesque town for over 25 years. She says in 10 or 15 years trade has changed greatly - first for the better and now for the worse. She had a full appointment book just a few months ago but now she’s lucky to get three people in a day.

“We may work today and not work tomorrow. It depends on whether there are tourists,” she says.

Cafes in Deauville are deserted
Sadly, the tourists are not coming to stay in this part of the world. Bad weather has played its part, but everyone it appears is tightening their belt.

The town’s mayor, Jean-Pierre Millet, one of Carola’s clients, admits: “Over the last six months we could feel we were going to have a less good time than before”.

All of which is bad news for Carola and her family - her daughter works in the town in the summer months.

This area relies on agriculture as much as tourism. High oil and gas prices are making it harder for farmers to make ends meet. They are angry that their lives have been so radically affected by financial dealings thousands of miles away.

Economists say worse is still to come for the continent, at least until 2010.

“There are many reasons for this. The U.S.-UK model of regulation was not as effective as the French and the German – or the Russian. Strong regulation is required. It does not matter you are making milk powder or loans,” believes William Wilson, CEO of Vanguard Group.

U.S. bailout plan becomes law

The summit in Paris followed Washington's approval on Friday of a $US 700 billion bailout plan aimed at restoring confidence in the American financial system.

After signing it into law, President Bush remained cautious about the prospects for the economy.

In his weekly radio address, he said the benefits of this package would not all be felt immediately.

The plan involves the government buying huge amounts of debt-ridden assets off stricken banks in the hope of getting credit moving again.

Despite passing the bill, Wall Street ended an intensely volatile week with another sell-off and many economists predict the U.S. cannot avoid falling into recession.

 

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