EU calls for medium-term bank debt guarantees

In the joint statement issued after a meeting of all 27 EU leaders in Brussels, the heads of state said measures for restoring confidence in the banking sector are “urgently needed.” The statement said guarantees “on bank liabilities would be required to provide more direct support for banks in accessing term funding (short-term funding being available at the ECB and relevant national central banks), where appropriate. This is also an essential part of the strategy to limit deleveraging actions.” A repeat of 2008, when national governemnts set up liquidity programs, may not be adequate under current market conditions, the statement said. The EU leaders urged a “truly coordinated” approach, encouraging the European Commission to work with the European Banking Authority, European Central Bank and other bodies.

I’m as pissed at the banks as anyone else but we have to deal with reality here. Like it or not markets and economies react positively to these bank bailouts despite the populist rhetoric about jailing the bankers and shutting them down.