EuropeGermany and Ireland are for the moment the first two European countries that adopted emergency measures in order to ease the effect of the widening international credit crisis in the Euro Zone.

German Chancellor Angela Merkel is moving fast in order to avoid the worst consequences of the financial turmoil hitting German private banking and she has assured her determination to guarantee bank deposits.

After a meeting of the prime minister's of the largest European economies -UK, Italy, France and Germany- the leaders committed themselves to act locally in order to shore up failing financial institutions and banks, rather than signing a common plan for the whole European Union. Nevertheless a global economic summit has been scheduled to examine the international financial system's health.

Merkel made public her commitment to work in a bailout plan after the announcement of the approval of a EUR 50 Billion package to save Hypo Real State Bank.. This German move is quite contradictory to their original criticism against Ireland for having announced similar intentions a few days ago.

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Analyst comments

  • Lee Hardman, strategist at the Bank of Tokyo-Mitsubishi UFJ
    "The sense that there won't be any coordinated action in Europe is undermining sentiment in the euro and the re-negotiation of the Hypo Real Estate deal soured sentiment." - Reuters
  • Daragh Maher, currency strategist at Calyon
    "It is likely that the news flow on European banks and the country response will dominate the movements in foreign exchange. The delivery of a bailout in Europe would likely provide some relief to the euro, but there is a sense in the market the lifecycle of the European financial system is simply a lagged echo of the U.S., in much the same way as the wilting European economy appears to be a lagged mimic of the U.S. also." - Dow Jones