European leaders agreed Sunday on a coordinated rescue plan to guarantee interbank lending, inject cash into the banking sector and take other measures to beat back the crisis caused by the global financial meltdown.
European leaders meeting in
"I believe that we will see over the coming few days worldwide action that will make people see that confidence in the banking system can be restored," British Prime Minister Gordon Brown told reporters.
Markets gave an initial cheer to the moves to check the slump, with
"They're stepping up to the plate with all their fire power. It is literally a financial, economic call to arms," Peter Kenny told Reuters.
"It is not going to be overnight but it is going to help a lot. It is going to take the edge of panic off market psychology," he said.
The plan backed by prime ministers and presidents from the 15 countries that share the euro currency included state guarantees for new medium-term bank debt and state injections of capital into banks, adding to help from the ECB to unfreeze commercial paper markets, which would provide companies with vital access to funding and help stave off an economic slump.
"The steps taken in
"NO GIFT TO BANKS"
Details of how governments would buy stakes in banks are due to emerge during the week, starting with
"This is not a gift to banks but to help them function," French President Nicolas Sarkozy said, mindful of the public opinion backlash in the United States when Washington pushed through a $700 billion taxpayer-funded rescue plan for U.S. banks stuck with unsellable debt tied to the housing slump.