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    European leaders vow to fight against growing financial crisis

    HotNewsTurkey with wires
    05.10.2008 - 09:35 | Son Güncelleme:

    The leaders of Europe’s largest economies vowed Saturday to work together to stop a growing financial panic, but they failed to offer a system wide answer to a credit crisis that has forced them to bail out several banks in the past week.

    "We jointly commit to ensure the soundness and stability of our banking and financial system and will take all the necessary measures to achieve this objective," the leaders of France, Germany, Britain and Italy said in joint a statement.

     

    The statement, released after about three hours of talks, was more a declaration of principle and call for coordination of national responses, than an announcement of instant new measures to deal with the worst financial crisis since the 1930s.

     

    They urged the European Commission to produce legislative proposals in the near future on bank deposit insurance in the European Union and urged the immediate establishment of cross-border supervisory colleges to improve cross-border surveillance.

     

    “We are fully aware of the responsibility that weighs on our shoulders,” said President Nicolas Sarkozy of France, who hosted the gathering at the sumptuous Elysee Palace here.

     

    The crisis has become the biggest financial challenge for European policymakers since the introduction of the euro as a Continent-wide currency in 1999.

     

    Saturday afternoon meeting was convened by Sarkozy, whose country holds the rotating presidency of the European Union.

     

    "We have taken a solemn undertaking as heads of states and government to support the banks and financial institutions in the face of this crisis," he told a news conference flanked by the other leaders.

     

     

    DEFICIT PLEAS

    The leaders' statement explicitly referred to the fact that EU rules which impose limits on national deficits also allowed for exceptional circumstances to be taken into account in their application, and that such circumstances now existed.

     

    That recognized in theory that any government which runs up a larger deficit because of money ploughed into bank rescues, or maybe just because of economic downturn itself, could plead for a waiver from the EU deficit limits.

     

    German Chancellor Angela Merkel, keen not to become bankroller-in-chief as governments seek a joint response to the crisis, said those who caused the trouble must help fix it.

     

    British Prime Minister Gordon Brown said no sound bank would be allowed to fail for lack of liquidity.

     

    "We will continue to do whatever is necessary," he said. Leaders were calling on the European Investment Bank, the EU's public lending arm, to "frontload" a 30-billion-euro rise in loans to small firms squeezed by a U.S.-induced credit crunch.

     

    The summit follows approval on Friday by the U.S. Congress of a $700-billion bank bailout plan to tackle a crisis sparked by a housing market collapse and a surge in bad mortgage debt.

     

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