EUROPEAN FINANCE ministers and policymakers yesterday downplayed the likelihood of replicating the US initiative to support the banking sector by acquiring troubled financial assets.
While welcoming moves to stabilise the US situation, the officials said the scale and nature of the problems in Europe were significantly different.
Ulrich Wilhelm, spokesman for German chancellor Angela Merkel, said there was no need for "a measure along the lines of what has been decided in the US".
German finance minister Peer Steinbrück also made clear, after a telephone conference with his contemporaries in the G7 group of nations, that Berlin did not need to offer a rescue package.
A senior official close to Dr Merkel said Germany was focused on how to prevent another crisis because any extra regulation now would come too late to address the current one.
But the official hinted that a Franco-German announcement may be on the way, pointing to a meeting of officials from the two countries set for Thursday, when Mr Steinbrück is to address the German parliament.
The French government also said it did not plan to set up a toxic asset fund or contribute to the US scheme. British officials said they had already instigated a special liquidity scheme, but like France and Germany they did not intend to pursue a toxic asset fund.
The European Commission made clear it was not planning any emergency measures. It welcomed efforts to stabilise the US situation, but said it was for member states to decide on any US-style bailout scheme.
Some European leaders are eager to see change at the interstate level. "The international financial crisis has shown there is only so much we can do at a national level," Dr Merkel told a business conference in Berlin.
"Most of what needs to be done must be done at an international level."
She said Germany would push harder at the G7 for moves to impose tougher capital requirements on banks, to improve transparency of financial markets and to bar ratings agencies from helping to develop financial products that they rate. She also said the crisis would top the agenda of the EU council meeting next month.
The European Commission, the only body that can propose EU-wide legislation, said proposals to improve banking supervision and toughen the rules on bank capital could be unveiled next week and adopted by commissioners "very soon".
Draft versions of the legislation suggested establishing "colleges" of national supervisors of cross-border banks, restrictions on inter-bank exposures and a tightening of securitisation so that originators of securities have to hold sufficient capital to cover 10 per cent of exposures they securitise.
The proposals have not proved universally popular and in particular the last idea has provoked an outcry from the banking sector. But EU internal market commissioner Charlie McCreevy has said: "Doing nothing is not an option." - ( Financial Times service)
