Merkel repeats opposition to European banking bailout fund

12th October 2008, Comments 0 comments

She said countries need to have "the same toolboxes" to fight the crisis but also the flexibility to use those instruments as they see fit.

Paris -- German Chancellor Angela Merkel repeated her opposition to a joint European fund to aid with a bailout of the banking system Saturday, a day before an emergency European summit on the topic.

"This isn't about a European fund, but about balanced behavior by all member states," she said while attending a ceremony in France to unveil a memorial for late French President Charles de Gaulle.

She said countries need to have "the same toolboxes" to fight the crisis, but also the flexibility to use those instruments as they see fit.

The German Chancellor was speaking in France where she met with French President Nicolas Sarkozy, with the main order of business to be the joint opening of the memorial.

The two also discussed a European answer to the financial crisis, which will be the subject of Sunday's emergency summit in Paris of eurozone countries.

The two politicians were meeting in de Gaulle's hometown of Colombey-les-deux Eglises, 120 kilometers southeast of Paris, on the 50 anniversary of the meeting of de Gaulle with then-West German Chancellor Konrad Adenauer.

The summit in Paris has the goal of establishing a "balanced reaction in the euro-zone to the financial crisis with the necessary leeway for the individual member states," said Merkel. She did not rule out providing capital to banks.

But she added that capital injections into banks is not the same as nationalization. Instead, she said, it is state assistance that puts the banks into a situation where they can function on their own. Merkel would not discuss specific figures.

An additional proposal by Sarkozy for a summit of all-important industrial nations is still under discussion. Merkel said all important market players should meet before the end of the year to discuss the architecture of a forward-looking financial order.

"A humane market regime only works with rules," she said. Previously, she has spoken of "market excesses" that have to be wedged into a social order.

In light of the ongoing financial crisis, Merkel and Sarkozy spoke of the importance of Franco-German relations.

"Europe has been hit by a crisis that never existed before, which was shook the world," said Sarkozy. "Europe can only protect its independence and remain competitive if France and Germany work together."

The historic meeting between de Gaulle and Adenauer was part of the process of Franco-German reconciliation after World War II, a development regarded as an important cornerstone in Western Europe's post-war political order.


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