EU finance ministers to coordinate responses to financial crisis

"Europe is united in the face of the financial crisis and determined to act in a coordinated way," French Finance Minister Christine Lagarde told reporters after chairing a monthly meeting with her EU counterparts.

"We agreed to assure the solidity and stability of our financial system and carry out any measures to reach that objective," Lagarde said.

The ministers said they would support systemic financial institutions, one day after their Eurozone members vowed to prevent any bank of systemic importance from falling apart.

"We are all committed to taking all necessary measures to enhance the soundness and stability of our banking system and to protect the deposits of individual savers," they said in a joint statement after the meeting.

As the first coordinated effort, EU finance ministers agreed to significantly increase the minimum deposit guarantee which the member states must offer savers in a bid to restore financial stability.

The EU law requires member states to guarantee savers' deposits of at least 20,000 Euros in case of a bank failure. Now the minimum amount was raised to at least 50,000 Euros. Many member states also decided to raise the minimum amount to 100,000 Euros.

In the aftermath of the global financial crisis, EU countries rushed to increase their minimum guarantee for bank deposits in a bid to calm savers' concerns about their money in troubled banks.

Ireland, followed by Germany and Denmark, even provided full guarantee for all private bank deposits in hopes of boosting confidence, but their unilateral moves angered others, which feared an outflow of deposits in their own banks.

EU finance ministers agreed that public intervention has to be decided at national level, but in a coordinated framework.

"We agree to coordinate closely in our actions and to take into consideration potential cross-border effects of national decisions," they said.

Article published courtesy of BuaNews