Extraordinary measures are needed for extraordinary situations' said economy minister Giulio Tremonti after an emergency summit with European Union (EU) leaders to counteract one of the world's worst economic crises in recent history.
The meeting of EU economic and finance ministers, focused on developing a common strategy to deal with the crippling credit crunch affecting world markets. Although Tremonti's proposed 300-milion-euro EU bailout fund was not successful, mainly because Germany deemed it insufficient to benefit all member states, EU ministers did agree to act in concert, not unilaterally.
‘Yesterday it was every man for himself; each member state appeared to be striking off on its own path and a united Europe no longer existed. Today we have closed ranks and on the big questions Europe is once again working as a single entity', Tremonti said after the summit.
On October 12, the countries agreed to a joint action plan to boost bank liquidity. Individual EU governments will take measures to recapitilise the banking system, make state-funded cash injections to ailing banks and guarantee inter-bank lending.
Italian cabinet ministers recently approved a crisis package to safeguard Italian depositors and investors and to ease growing financial anxiety throughout the country. The decree guarantees all bank deposits up to 103,000 euro. It also authorises the Treasury and the Bank of Italy to temporarily acquire shares in troubled banks (without participating in shareholders' meetings) and allows for state aid to financial institutions on an as-needed basis.
Italian ministers and the chief of Bank of Italy, Mario Draghi, have continuously sought to quell alarm about how the global crisis might hit Italy, explaining that the crisis package was intended to boost confidence in the financial sector. Tremonti maintains that Italian banks have not engaged in the creative financing or other risky financial operations that have put their international counterparts at risk. Noting that the conservative Italian banking system is thus in better health than in other Western countries, Draghi recently assured the press, ‘The Italian banking system is solid.'