European leaders have agreed on a plan they hope will encourage banks
to lend money and will help safeguard financial institutions from
French President Nicolas Sarkozy said after a summit in Paris Sunday
that the governments of 16 European countries agreed to guarantee new
inter-bank loans for up to five years. The government loan guarantee is
among several measures adopted at the meeting of the 15 members of the
European Union's "euro bloc" plus British Prime Minister Gordon Brown.
Mr. Sarkozy said no country acting alone would be able to do anything constructive during this global economic crisis.
Leaders of all 27 EU members are expected to examine the agreement when they meet in Brussels Wednesday.
The European summit came on the same day that World Bank and
International Monetary Fund officials in Washington agreed to protect
poor and vulnerable countries during the financial crisis.
IMF Director Dominique Strauss-Kahn said the economic crisis puts
additional strain on countries already suffering from rising fuel and
Strauss-Kahn also called the emergency measures announced by the European countries very positive.
In Asia Sunday, Taiwan's government announced it is extending a ban on
short-selling stocks and limiting how far shares can decline.
The Indonesian government also announced its stock market will resume
trading Monday. Officials suspended trading for three days last week,
following a sharp fall in share prices.
The global economic crisis began with a drop in the U.S. housing market
and the inability of some Americans to repay their home loans. Several
high-profile financial companies that invested in these loans
collapsed, and many banks now are reluctant to lend money to consumers,
businesses and each other.
Major European governments and the United States have stepped in to
take control of some sinking lenders, but at great expense to taxpayers.
The crisis has sent stock indexes plunging around the world.