France, Germany Promise Lasting Response to Europe Debt Crisis

Posted October 9th, 2011 at 4:45 pm (UTC-5)
Leave a comment

France and Germany are promising a “global, lasting and quick response” to the European debt crisis.

French President Nicolas Sarkozy and German Chancellor Angela Merkel held emergency talks Sunday in Berlin discussing how to keep the debt crisis from further infecting shaky European banks.

The two leaders declined to give any details of their plans, which Ms. Merkel says are still a work in progress. But Mr. Sarkozy says they include recapitalizing the banks. They say the plan will be ready when France hosts a summit of leaders from 20 industrialized and developing economies early next month.

Also Sunday, officials from France, Belgium and Luxembourg agreed on a deal to rescue Dexia bank from collapse.

Details are yet to be announced. Belgian media says the plan involves breaking up the bank, selling off its healthy parts and placing its toxic assets in a so-called government supported “bad bank.”

Dexia is owned in part by France and Belgium. It is the first European bank to face failure because of the eurozone debt crisis, which began when Greece needed a $159 billion bailout last year.

Ireland and Portugal also have needed bailouts, and there are fears Italy and Spain may be next.