BERLIN — The leaders of Germany and France, the eurozone's two biggest economies, said Sunday they have reached an agreement about how to strengthen Europe's shaky banking sector amid the region's debt crisis.
"We are determined to do the necessary to ensure the recapitalization of Europe's banks," German Chancellor Angela Merkel following talks with French President Nicolas Sarkozy in Berlin.
A "comprehensive response" to the eurozone's debt crisis will be finalized by month's end, including a detailed plan on recapitalizing the banks, Sarkozy said at Berlin's chancellery.
"The economy needs secure financing to ensure growth. Twhere is no prospering economy without stable banks," he said. "That is what is at stake."
However, both leaders declined to name a price tag for the new measures or elaborate further, saying the proposal must first be discussed with other European leaders.
Analysts have urged the eurozone to identify all the banks in the region that need to replenish their capital reserves, then decide whether to compel them to raise that money on the open markets and to provide government financing to the ones that can't.
Many experts say the capital cushions of many European banks must be strengthened in order to withstand a possible government bond default by Greece. Some analysts fear that a Greek default could cause a severe credit squeeze that would even threaten banks not exposed directly to Greece's debt because banks could be afraid to lend to each other.
The credit freeze following the collapse of U.S. investment bank Lehman Brothers in 2008 choked off lending to the wider economy and caused a deep recession.
Merkel did not provide details Sunday about how the recapitalization would work.
- EX-BYU quarterback Max Hall arrested in...
- Ben Barnes, Katherine Heigl in tune in...
- Living with Children: Late nights, not school...
- 32 teens escape from Nashville detention center
- Video purports to show second beheading of US...
- AP Analysis: Putin digs in for long Ukraine...
- Lawmakers: Islamic State groups wants to hit US
- No gray area: Beliefs shape firm, disparate...
- EX-BYU quarterback Max Hall arrested in... 61
- 10 things to know about corporate... 32
- Lawmakers: Islamic State groups wants... 22
- House, Senate intel chiefs press White... 17
- Obama tamps down prospect of strikes in... 16
- Saudi king says terrorists will reach... 13
- Freelancers and millennials help usher... 12
- 'Deseret News National Edition': Common... 12