World financial crisis

Emergency European financial plan agreed in Paris

Article published on the 2008-10-13 Latest update 2008-10-13 06:43 TU

Germany's Chancellor Angela Merkel, France's President Nicolas Sarkozy, France's Prime Minister Francois Fillon, and European Commission President Jose Manuel Barroso
(Photo: Reuters)

The markets in Asia reacted positively Monday to broad agreements by eurozone leaders on Sunday. In Hong Kong and Sydney, prices were up 2.4 and 5 per cent respectively with trading in Singapore and Manila also up. Oil prices also rose after reaching a one-year low on Friday.

This followed Sunday's meeting in Paris that brought together leaders from the eurozone countries as well as British Prime Minister Gordon Brown. The meeting came a G7 meeting this weekend in Washington and resulted in broad agreement on a common approach to stemming the financial crisis in Europe.

"This plan addresses all aspects of the financial crisis" said French President Nicolas Sarkozy while saying that the details would be worked out by individual European governments on Monday. "The time for decision on figures is tomorrow" Sarkozy said.

A statement released by all the leaders committed them to guaranteeing medium-term loans between banks. This is designed to encourage lending between financial institutions and means governments will underwrite loans of up to five years. These measures will be in place until the end of 2009.

Leaders will keen to point out that any government finance would come with conditions. "Taxpayers have the right to expect that if they are contributing to the stability of the financial system that this will be honoured' said German Chancellor Angela Merkel.

Britain's Prime Minister Gordon Brown held bilateral talks with the French president ahead of the eurozone meeting. Brown said afterwards he expected the markets to regain confident "over the next few days". The UK government has put 315 billion euros into safeguarding inter-bank loans along with 250 billion euros in short-term loans and bank buy-outs.