European leaders will do what they can to prop up banks and prevent them from failing. If necessary, troubled banks will be nationalized. What exactly do they have planned? We’ll have to wait on that:
WSJ: At a Paris summit, the leaders of the 15 countries that use the euro said they would partially nationalize their banks when necessary. Other choices on the menu of measures to cope with the growing financial crisis included state-guaranteed loans and the loosening of mark-to-market rules, which force banks to book their assets at the price they would get if they sold them now. Leaders also repeated a pledge to save any distressed bank.
French President Nicolas Sarkozy, hosting the meeting, said Germany, France and Italy would detail their national plans at about same time on Monday.
Whatever it is they’ve got planned, currency traders love the sight of 15 heads of state managing to work in concert, as the euro had its best day in three weeks. Maybe the euro can survive.