The president of the Eurogroup has called for a coordinated EU response to the problems posed by the global credit crisis.
Jean-Claude Juncker spoke after the Franco-Belgian group Dexia became the latest in a string of EU banks to be saved from going to the wall by multi-billion euro state intervention.
The four EU members of the G8 are due to meet later this week to work on a common strategy to combat the crisis.
It comes ahead of a full meeting of the G8 next week. The EU must pull together according to Juncker who said: “We cannot go on with a kind of ad hoc approach, we need a more systematic approach at the level of the Eurozone and at the level of the European Union.”
Meanwhile, Irish Prime Minister Brian Cowan has defended a radical decision to underwrite the Republic’s banks to the tune of 400 billion euros.
The move safeguards all deposits, bonds and debts in six banks and building societies for two years.
“Europe is not like the US,” said ECB President Jean-Claude Trichet, “we have the means necessary to deal with this crisis, which is not of our making, but against which, nonetheless, we must protect ourselves.”
Shares in Italy’s biggest bank Unicredit plummeted on Tuesday amid rumours that it was also in trouble. The crisis has reached as far as Iceland where the government has bought a majority stake in the country’s third largest bank, Glitnir.
It’s hoped the 600 million euro deal – effectively a nationalisation – will ensure the survival of the bank, which had lost 85 percent of its stock value.