EU leaders endorsed a €1.7 trillion ($2.3 trillion) continent-wide emergency bailout for the banking sector at summit talks Wednesday, and turned to debate other measures to prevent the global financial crisis from stalling the economy.
Polish Finance Minister Jacek Rostowski, along with other EU officials and diplomats, confirmed that the leaders had endorsed the plan.
The agreement paves the way for all 27 EU nations to shore up national banks and other financial institutions. Under the plan’s broad principles, individual countries put up a total of €1.7 trillion ($2.3 trillion) in guarantees and emergency aid to help banks.
The deal comes after Britain and the 15 countries that use the euro passed the plan Sunday and it is meant to reassure still shaky financial markets and investors that all is being done to stop the meltdown.
The plan leaves individual nations flexibility to chose from a range of measures such as buying shares in banks and guaranteeing savings and interbank loans.
The European moves are modeled on Britain’s €64 billion ($88 billion) plan to partly nationalize major banks. British Prime Minister Gordon Brown has also promised to guarantee billions of euros of interbank loans to restore confidence in the financial sector.
The joint action, along with broadly similar U.S. plans that include taking stakes in big banks, have helped turn around severe declines in world stock markets. But credit markets remain in distress with fearful banks willing to lend to each other only at abnormally high rates, and that makes credit harder to get for businesses and consumers.
EU leaders were also debating a call by Brown to hold global talks among the world’s top economies, including the U.S., China, India and others this year to reform the world’s financial system.
Brown said a global summit could be held as soon as November or December. It would also aim to relaunch stalled global trade talks.
In a document given to leaders, Brown said he wanted banks to rethink how they deal with risk. He also called for strengthened rules covering such issues as the amount of reserves banks must hold to cover potential losses and improving transparency in financial markets.