Europe must go beyond G7 in finance crisis: EU

October 13th, 2008 - 12:31 am ICT by IANS  

Gordon BrownParis, Oct 12 (DPA) The European response to the global financial crisis must go beyond the proposals made Friday by the G7 finance ministers, European Commission President Jose Manuel Barroso said Sunday in Paris.”The G7 finance ministers took some good decisions. They expressed important general principles. But we must go beyond that … by offering a more detailed plan for the euro zone and Europe,” Barroso said before the start of a summit meeting of the leaders of the euro-zone nations in the French capital.

On Friday, the G7 finance ministers said all countries should undertake all necessary measures to prevent “important financial institutions” from collapsing.

Barroso also said it was important that the euro-zone leaders propose “a coordinated, coherent response” to the crisis, which has put the industrial nations on the brink of an economic recession.

The proposed plan, he said, would be a basis “for other common responses” to be proposed Wednesday at the European Union (EU) summit in Brussels.

French President Nicolas Sarkozy told reporters that the plan would be “ambitious” and that he expected Europe to speak with “one voice” in responding to the crisis.

However, as the crisis has spread from the US, European nations have so far largely acted unilaterally to contain the damage.

Britain has undertaken a 60 billion euro ($82 billion) plan to partly nationalise four large banks. Ireland has guaranteed deposits in its six largest banks. Other countries have also acted on a case-by-case basis to bailout struggling banks.

The euro-zone leaders are expected to support the partial nationalisation of struggling banks, as Britain has done. British Prime Minister Gordon Brown, whose country is not part of the euro-zone, held separate talks with Sarkozy before the start of the summit.

German media reported Saturday that Berlin could pass legislation this week to recapitalise its banks with a vast cash injection of up to 100 billion euros.

Chancellor Angela Merkel has said she will sign off with euro-zone leaders Sunday on the extraordinary bail-out before announcing details. Other countries may decide on similar measures.

However, many analysts believe that this may not be sufficient to halt the meltdown, and that governments need to guarantee interbank trades to ease the credit crunch and restore confidence in the banking sector.

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