Europe Will Guarantee Interbank Lending

Euro zone finance ministers agreed on October 12 to guarantee interbank loans for up to five years in a bid to thaw the credit squeeze on the continent, and pledged to inject additional capital into their banks following a meeting in Paris brokered by French President Nicolas Sarkozy. Further details for each country are expected to be announced simultaneously on Monday, October 13. U.S. Treasury Secretary Henry Paulson, after saying October 10 that the United States would consider acquiring equity stakes in ailing U.S. banks, was reported to be considering a similar guarantee for banks.