European leaders agree on financial deal

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Nicolas Sarkozy, France's president, said that the plan would refinance banks, guarantee interbank lending and ensure that troubled banks do not fail. Individual depositors' accounts will also be protected and the plan will also ease some regulations to give banks more flexibility.

The guaranteeing of interbank loans and the refinancing of the banks are good until the end of 2009.

Sarkozy told sources that they want to give back banks the means to lend, to support the economy to enable households to borrow for mortgages or consumption and give companies the means necessary to invest for growth. Sarkozy went on and said that in order to have a healthy economy and sustainable growth, the world needs a solid financial sector.

Sarkozy announced the agreement after a meeting of leaders of the Eurozone countries. Sarkozy holds the rotating European Union presidency as well.

The plan is not a gift to bank management and managers who contributed to the crisis should be held responsible, according to European officials. The refinancing will be made at market rates and will consider the financial health of the banks.

Slightly different approaches will have to be taken by each country because they have different laws and banking regulations but their actions will be compatible.

Nicolas Sarkozy, President of the French Republic. - Photo courtesy of sarkozy.fr image:35449:2::0

Sarkozy said that they have a tool kit and they will see what suits whom in order to achieve what they are setting out to achieve and that is to make sure that an economic crisis does not occur on top of the financial crisis. Sarkozy went on and said that when things calm down than they will go back to their basic training and responsibilities.

The markets open on Monday and the leaders want to work quickly to reassure investors before the markets open.

On Monday France, Germany and Italy will hold cabinet meetings and will announce concrete plans, Sarkozy said.

Sarkozy said that the measures will be implemented in France right away without delay.

Gordon Brown, The British Prime Minister, met with Sarkozy and other leaders before the summit and told sources that there was common ground about what needs to be done to fix the financial markets.

Officials from the Eurozone countries will present their plan to the rest of the European Union at a meeting that is going to take place in Brussels, Belgium this Wednesday. Sarkozy said that the next step after that will be to urge the United States to hold an international summit to manage the crisis.

Sarkozy also said that the crisis did not come from Europe and it started in the U.S. and it is now a worldwide crisis. He went on to say that they now have to reform urgently an international financial system that needs to be reformed.