France and Germany clashed today over the idea of a US-style financial rescue fund for Europe as EU governments went their separate ways in response to the global credit crisis.
The European Commission appealed for more consistency in deposit guarantee schemes and stronger pan-European financial supervision, but the apparent discord between Paris and Berlin underlined the difficulty of finding a common approach.
French finance minister Christine Lagarde said in a German newspaper interview that a "European safety net" could be needed to prevent a bank in a smaller EU country from going bankrupt. She put no figure on such a fund.
A European government source said France would propose a €300 billion rescue package for the financial sector at a meeting of leaders of the four big European powers and top EU officials tentatively set for Saturday in Paris.
The French finance ministry declined comment, but the German finance ministry said: "The government completely disagrees with these plans."
Chancellor Angela Merkel said separately Germany "cannot and will not issue a blank cheque for all banks, regardless of whether they behave in a responsible manner or not".
European Commission president José Manuel Barroso said he was working closely with French president Nicolas Sarkozy to present proposals to the leaders in Paris.
But British prime minister Gordon Brown's office would not confirm he would attend, and France said no firm date had been set for the meeting, which officials said would only go ahead if there was sufficient consensus to achieve a result.
"It's not just a problem of injecting liquidity," Mr Barroso told a news conference. "We also need to inject credibility in the European response. That's why we are urging member states for closer cooperation."
Ireland's decision to guarantee all deposits in Irish banks infuriated Britain, sucking money away from British banks where the guarantee is more limited, and drew fire from Brussels.
Reuters