October 12, 2011
The European commission will try to seize the initiative in overcoming the eurozone crisis by putting forward its own plan to recapitalise European banks.
José Manuel Barroso, EC president, indicated that he would put forward proposals on Wednesday for propping up banks as part of a wider scheme to resolve the sovereign debt crisis through greater economic integration. He will also propose further strengthening the main bailout find, the European financial stability facility (EFSF).
Barroso's upbeat comments on Tuesday came hours after Jean-Claude Trichet, outgoing European Central Bank (ECB) president, warned that the continent's financial crisis had become "systemic" and demanded swift action to prevent such dramas recurring.
The sense of urgency within Europe's policymaking elite was underlined by reports that the European Banking Authority (EBA), based in London, is said to be pressing banks to achieve a core capital ratio of at least 7% in a new round of stress tests. This, according to Reuters, would require 48 banks to raise €99bn (£87bn) in fresh capital. The International Monetary Fund (IMF) has said European banks require €200bn.
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