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EU backs higher bank guarantees EU leaders seek broad bank reform
(about 3 hours later)
The European Commission has proposed lifting the minimum state guarantee on bank deposits to 100,000 euros ($136,760; £77,760) within a year. European leaders are calling for major reform of the global banking system, as they meet to discuss an EU rescue plan.
The proposal is one of several due to be tabled at a summit in Brussels where EU leaders are to discuss a multi-billion-euro financial rescue scheme. UK PM Gordon Brown said the IMF should be "rebuilt" to help regulate the world's financial systems.
EU ministers already committed last week to raising the guarantee level to 50,000 euros. German Chancellor Angela Merkel backed French President Nicolas Sarkozy's call for better international supervision of the financial system.
The EU will also discuss lifting the guarantee on bank deposits to 100,000 euros ($136,760) within a year.
However, the European Commission's President, Jose Manuel Barroso, urged leaders not to forget climate change, the original focus of the summit.
Early warning system
Speaking to reporters on Wednesday ahead of the meeting, Mr Brown made an impassioned plea for a global summit to reform the International Monetary Fund (IMF), to help regulate the world's financial systems.
Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity Jose Manuel BarrosoHead of European Commission Germany 'on brink of recession'Euroblog: East left out?Q&A: EU green energy
He also called for the creation of an early warning system for the international economy and for more cross-border supervision of multinational financial companies.
"We need to deal with the crises as they arise in a better, more coordinated way," Mr Brown said.
"The IMF has got to be rebuilt as 'fit for purpose' for the modern world."
Mrs Merkel said a G8 summit should be held with the participation of emerging countries.
Earlier this week, Mr Sarkozy called for joint EU-US action, and said he would go to Washington with Mr Barroso to persuade President George W Bush and his successor to come on board.
Regulatory rethink?
At Wednesday's EU summit, the 27-member bloc is expected to rally behind plans agreed on Sunday by officials from the 15-nation eurozone.
Jose Manuel Barroso pays tribute to Gordon Brown
The 100,000-euro (£77,760) deposit proposal is one of several due to be tabled at the summit, and follows a commitment last week to raise the guarantee level to 50,000 euros.
But the cost of the latest proposal is likely to concern smaller EU countries.But the cost of the latest proposal is likely to concern smaller EU countries.
Ferenc Gyurcsany - the prime minister of Hungary, one of the worst affected EU countries - called for more Europe-wide support for individual nations.
"The current approach is to let the nation state apply its own instruments, but we urge more common actions," he said. "We need a supervisory body at a European level".
EU Internal Markets and Services Commissioner Charlie McCreevy said increasing the minimum protection by next year would "strengthen Europeans' confidence in the safety of their deposits".EU Internal Markets and Services Commissioner Charlie McCreevy said increasing the minimum protection by next year would "strengthen Europeans' confidence in the safety of their deposits".
Regulatory rethink? Also on the packed agenda for the two-day talks:
At the summit on Wednesday, the 27-member bloc is expected to rally behind plans agreed on Sunday by officials from the 15-nation eurozone.
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  • Leaders are expected to sign an immigration pact, committing their countries to common principles for handling immigrants
  • A decision to revive the failed Lisbon treaty, meant to give the EU more stable institutions in difficult times, is expected to be put on the back-burner until December
  • Talks on a new EU-Russia partnership treaty have been postponed, amid continuing concern about Russia's military presence in Georgia. There are divisions in the EU about when to resume them
    • Markets across Europe rallied after eurozone governments last Sunday pledged around $3 trillion (£1.7 trillion) to restore confidence in the banking system.Markets across Europe rallied after eurozone governments last Sunday pledged around $3 trillion (£1.7 trillion) to restore confidence in the banking system.
    However, EU leaders have warned that it is too early to declare this crisis over.
    "This is and remains work in progress. We see light at the end of the tunnel but we are not yet there," said the head of the European Commission, Jose Manuel Barroso.
    On Tuesday, recession fears pushed US share prices lower despite a $250bn (£143bn) government bank rescue plan.On Tuesday, recession fears pushed US share prices lower despite a $250bn (£143bn) government bank rescue plan.
    Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity Jose Manuel BarrosoHead of European Commission Germany 'on brink of recession'Euroblog: East left out?Q&A: EU green energy
    Asian and European stock markets also lost ground following two days of dramatic rises, and a report suggested Germany, the EU's biggest economy, was on the verge of recession.Asian and European stock markets also lost ground following two days of dramatic rises, and a report suggested Germany, the EU's biggest economy, was on the verge of recession.
    Speaking to reporters on Wednesday ahead of the meeting, UK Prime Minister Gordon Brown said the International Monetary Fund (IMF) should be "rebuilt" to help regulate the world's financial systems.
    He also called for the creation of an early warning system for the international economy and for more cross-border supervision of multinational financial companies.
    Mr Barroso said earlier that there was a need to rethink regulatory and supervision rules for the financial markets, as well as limits on executive pay.
    Eurozone leaders, meeting under the chair of the French, who hold the current presidency, are expected to brief their EU colleagues on their rescue plans.
    France, Germany, the Netherlands, Spain and Austria are planning to guarantee bank lending, provide short-term liquidity and partly nationalise some banks, in schemes modelled on the UK's £500bn (640bn-euro) bail-out package.
    However, the commission must scrutinising each country's plan to ensure they do not disadvantage other EU member states or violate EU competition laws.
    The packed agenda for the two-day talks also includes:
    • Leaders are expected to sign an immigration pact, committing their countries to common principles for handling immigrants.
    • A decision to revive the failed Lisbon treaty, meant to give the EU more stable institutions in difficult times, is expected to be put on the back-burner until December.
    • Talks on a new EU-Russia partnership treaty have been postponed, amid continuing concern about Russia's military presence in Georgia. There are divisions in the EU about when to resume them.
    Climate shiftClimate shift
    The EU meeting was originally due to focus on climate change.The EU meeting was originally due to focus on climate change.
    Italy, Germany and Poland have argued that existing targets for reducing greenhouse gas emissions would impose extra burdens on electricity generators and carmakers, as an economic slowdown looms.Italy, Germany and Poland have argued that existing targets for reducing greenhouse gas emissions would impose extra burdens on electricity generators and carmakers, as an economic slowdown looms.
    Jose Manuel Barroso pays tribute to Gordon Brown
    Environment Commissioner Stavros Dimas told the BBC's environment analyst Roger Harrabin that member states should be able to trade away more than half of their responsibilities for cutting greenhouse gas emissions by getting developing countries to install clean technologies on their behalf.Environment Commissioner Stavros Dimas told the BBC's environment analyst Roger Harrabin that member states should be able to trade away more than half of their responsibilities for cutting greenhouse gas emissions by getting developing countries to install clean technologies on their behalf.
    The European Commission originally proposed that member states should be able to trade no more than a third of their responsibilities.The European Commission originally proposed that member states should be able to trade no more than a third of their responsibilities.
    The new proposal is highly controversial and will be resisted by the European Parliament because it has emerged that some of these clean technology projects would have been built anyway - in those cases, there is no carbon saving.The new proposal is highly controversial and will be resisted by the European Parliament because it has emerged that some of these clean technology projects would have been built anyway - in those cases, there is no carbon saving.
    Some member states will also resist any trading over 50% for fear that it will undermine Europe's credibility on climate change, our correspondent says. Mr Barroso warned that "climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity".
    And the head of the European Commission, Jose Manuel Barroso, warned that the EU's ambitious plans should not be hijacked by concerns about economic costs.
    "Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity," he said.
    If Europe were to give up its leading role on climate change, "there will be less incentives of others to follow", he added.