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Eurozone countries agree on approach to credit crisis
News item | 13-10-2008
The Eurozone countries have reached agreement on a joint approach to the credit crisis. They are willing to invest in their financial institutions and stand surety for their banks. Any measures they take will be coordinated.
The eurozone countries will make an extra effort to get money moving again between the banks and other financial institutions. They aim to do so by guaranteeing some of the loans between banks and other financial institutions.
After talks in Paris, prime minister Jan Peter Balkenende called it a significant move, because financially healthy banks have also been finding it hard to obtain money in the past few days.
This has prevented them from lending to businesses that want to pay
suppliers or invest - which is bad for the economy as a whole.
According to Mr Balkenende, it is natural for the eurozone countries to work
together. 'We share the same currency and a common central bank, and our
banking systems are closely interconnected.'
Investment
The eurozone countries have declared themselves ready to invest in their financial institutions if they face difficulties due to the exceptional circumstances. They will also stand surety for new loans to their financial institutions.
Mr Balkenende expects that some of the countries will announce details of their plans within the next few days.
But the banks and insurance companies will not receive a 'blank cheque', said Mr Balkenende. They must be basically healthy and meet several conditions. The banks will also have to pay for government guarantees.
Coordination
The measures taken will be coordinated among the eurozone countries and with the European Central Bank (ECB). 'This way we will prevent solutions in one country from creating new problems in other countries,' said Mr Balkenende.
Restore confidence
'Confidence will not be restored overnight,' said Mr Balkenende. 'But all the conditions are in place to face the problems together if it comes to the worst.'
The approach is preventive. 'All the countries are now determined to act before the next domino falls.'