After the Dow Jones industrial average ended its worst week in history, plummeting more than 18 percent last week, world leaders scrambled all weekend for a way to unblock money markets before they open today.
At an emergency summit of leaders of the 15 euro-zone countries in Paris yesterday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalization.
But it stopped short of a one-size-fits-all solution. It will be up to individual governments to announce how they will implement the measures.
"I want to tell our compatriots in all the countries of Europe that they can and should have confidence," said President Nicolas Sarkozy of France, the summit host.
Sarkozy hoped the momentum from yesterday's meeting wouldn't stop at Europe's borders, and renewed his call for a summit of major world economies to help rebuild an international financial system "to make European ideas triumph."
Jean-Claude Trichet, chief of the European Central Bank, welcomed the unity of Europe's leaders but warned there is more work ahead.
"The force of unity that we showed today is a fundamental element of confidence," said Trichet said. But there is still much for governments and central bankers to do, he added.
European Commission President Jose Manuel Barroso said: "Our analysis isn't of an immediate miracle."
The plan follows Britain's $88 billion plan to partly nationalize major banks and promise to guarantee a further $438 billion of loans to shore up the banking sector.
There was no sum given on how much the EU measures would cost, and Sarkozy said each country would decide how much it would spend.
Prime Minister Gordon Brown of Britain, who met with Sarkozy earlier yesterday, said: "I believe that there is common ground now about what needs to be done, that it has to be comprehensive, and it has to be all countries working together to get to the bottom and solve what is a global financial problem."
Sarkozy said the measures - which also include new accounting rules for banks - will be enacted "without delay" in the 15 countries using the euro.
