Posted October. 14, 2008 06:46,
Major European central banks hammered out a comprehensive agreement to ease the financial crisis yesterday after a nightmarish week for the continents markets.
The leaders of the 15 EU countries agreed to temporarily guarantee interbank loans through the end of next year at an emergency summit in Paris. They also agreed to secure capital by taking ownership stakes in troubled banks like the United Kingdom has done.
Germany, France and Italy came up with measures to restore market trust based on the agreed framework.
Berlin announced a rescue plan to inject 400 billion euros (540 billion U.S. dollars) into the market in line with other EU countries. Of the amount, 250 billion euros (338 billion dollars) will go to guaranteeing interbank loans and 100 billion euros (134 billion dollars) will increase capital for banks.
In response, the European Central Bank, the Bank of England and the Swiss National Bank issued a statement saying they will offer unlimited short-term dollar funds to commercial banks at a fixed interest rate.
In the wake of the agreement, European stock markets including Germanys benchmark DAX, Frances CAC40 and Britains FTSE 100 rose sharply.
In Japan, Finance Minister Shoichi Nakagawa said, I would consider guaranteeing all bank deposits if necessary, hinting at Tokyos efforts to prevent financial jitters in advance in the wake of the U.S.-led financial crisis.