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    Sarkozy expects ambitious, coordinated plan at summit

    HotNewsTurkey with wires
    12.10.2008 - 11:58 | Son Güncelleme:

    France's President Nicolas Sarkozy began welcoming European leaders to a Paris crisis summit on Sunday, saying he expected "an ambitious, coordinated" plan to contain the financial crisis. (UPDATED)

    "On Wednesday were going to try to get all of Europe facing in the same coordinated and ambitious direction," Sarkozy told reporters, referring to next weeks Brussels summit of all 27 European Union members.

     

    "That's what I expect: Europe speaking with one voice," he added.   

     

    Leaders of the 15 eurozone countries plus Britain are gathering in Paris to announce a new package of measures to protect their banks from the global financial crisis,  while in Britain, banks were in crisis talks with the government and regulators that could see the government take multi-billion-pound stakes in several lenders.

     

    Across the globe, Australia and New Zealand said they would guarantee bank deposits, and Gulf Arab states took emergency measures to boost confidence in the financial system.

     

    The European meeting comes a day after leading emerging nations met in Washington for vital Group of 20 (G20) talks on the sidelines of the annual meeting of the 185-member IMF.

     

    The G20 grouping of countries which collectively account for 85 percent of the global economy said they had agreed to use "all financial and economic tools" to stabilize the system.

     

    These efforts would be "closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole," said a joint statement.

     

    SYSTEM RISKS COLLAPSE: IMF

    The head of the IMF, Dominique Strauss-Kahn, claimed a breakthrough with the first global pledge by members of his organization to cooperate to stabilize turmoil in the financial sector.

     

    He had earlier warned that the financial system risked collapse.

     

    "Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," he said.

     

    Coordination of actions to tackle the financial crisis is considered vital to prevent the actions of one country harming another and exacerbating the problems of bank solvency and credit shortages.

     

    In the Great Depression of the 1930s, so-called "beggar-thy-neighbor" measures taken unilaterally by countries are considered to have deepened the economic pain.

    FIVE-POINT ACTION PLAN

    The different groups that have met since Friday in Washington -- the Group of Seven, the Group of 20 and IMF members -- have all supported a five-point action plan to stabilize the financial system.

     

    It is vague on details and contains no timeframe, but commits countries to support institutions underpinning the international financial system, to take measures to get credit flowing, to assist banks in raising capital and to reassure savers.

     

    The plan also commits them to helping restart frozen markets for mortgage-backed securities, complicated financial instruments that have plummeted in value and have exposed banks to billions of dollars of losses.

     

    It remains to be seen if the reassuring messages will be enough to calm stock markets Monday after one of the worst weeks in economic history last week.

     

    U.S. President George W. Bush said the world's richest economies in the Group of Seven were united on a "serious global response" to the financial meltdown.

     

    "We will stand together in addressing this threat to our prosperity. We will do what it takes to resolve this crisis. And the world's economy will emerge stronger as a result," he said.

     

    Among other announcements Saturday, the main policy-making body of the IMF said the institution, a lender of last-resort tasked with stabilizing the monetary system, stood ready to lend to countries in need of capital.

     

    COLLECTIVE PLAN

    In Paris, European leaders are expected to work on a collective action plan to help their ailing banks.

     

    French President Nicolas Sarkozy, the current head of the European Union, was to host first Britain's Prime Minister Gordon Brown and then his 14 colleagues from the single-currency bloc in the Elysee Palace.

     

    Sarkozy already met German Chancellor Angela Merkel on Saturday in France, stressing their unity the day before the summit where a British-style plan of partial bank nationalization might be unveiled.

     

    French Economy Minister Christine Lagarde promised that observers would "not be disappointed" by the measures to be adopted.

     

    No details have yet been released about the proposals, but there were signs that the 15 were leaning towards a policy already adopted in Britain under which the state guarantees inter-bank lending and buys stakes in banks.

     

    London hopes this voluntary part-nationalization, which has been accepted by some of its biggest institutions, will unfreeze capital and restore confidence.

     

    Britain is not part of the eurozone, but Sarkozy said he wanted to meet Brown to "maximize coordination."

     

    Sarkozy and Merkel promised that Europe's response would be closely coordinated.

     

    "Germany and France have perfectly identical views on the consequences to take from that for the short, medium and long term," Sarkozy said.

     

    Merkel agreed Paris and Berlin were "on the same path as regards putting in place a concerted and coherent reaction for the eurozone" but stressed that within this there was "naturally room for maneuver for each member state".

     

    "We are aware that state interventions are necessary because uncontrolled markets are not able to surmount these problems," she added.

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