Chancellor Angela Merkel, Germany's leader, defended her government's response to the global financial crisis yesterday as European Union governments took timid steps towards a co-ordinated approach – but again rejected proposals for a single European rescue plan.
Ms Merkel told the Bundestag, the parliament, that the measures her government had taken over the past week had been necessary to restore trust in the German financial system. "That also includes the fact that no person with savings has to worry about their deposit," she said, in a reference to her pledge to provide unlimited support to private bank customers.
Finance ministers of the 27 EU governments met for emergency talks yesterday and agreed to raise the minimum state guarantee to private savers from €20,000 (£5,600) to €50,000 in all 27 countries. They also laid down common guidelines for how EU governments can save threatened banks, without shifting the suffering to banks in neighbouring countries. The measures were an attempt to ward off growing criticism that the EU had failed to provide an adequate response to the crisis. The ministers failed, however, to dispel the image that the EU is dithering in the face of the worst financial crisis in its 50-year history. The lack of political co-ordination has raised concerns about the ability of the economic union to withstand the shocks.
Jose Manuel Barroso, the European Commission's president, warned of the dangers of a "renationalisation of the European financial system".
More than 200 of the continent's leading economists also warned in an open letter to EU leaders that Europe was "in the midst of a once-in-a-lifetime crisis ... Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath," they said.
The finance ministers agreed to a set seven "common principles", which included that states should make "timely" and "temporary" interventions to save threatened financial institutions without wasting taxpayers' money or – crucially – causing knock-on problems for fellow member states.Reuse content