The leaders of France and Germany, the eurozone’s top economies, hold a summit Sunday, October 9, to find common ground on a plan to recapitalize banks amid rampant fears of a crippling credit crunch.
According to AFP, German Chancellor Angela Merkel will meet French President Nicolas Sarkozy in the face of evidence that some European banks are creaking under the strain of the mounting debt crisis which has pushed Greece to the brink of bankruptcy.
U.S. President Barack Obama has warned that the European debt crisis, with its “potential to touch off a credit freeze, poses a threat to the global economy and has called on European leaders to act fast to stem it.”
The woes of Franco-Belgian bank Dexia have already brought Belgium into the line of fire with a warning by credit ratings agency Moody’s, while Fitch has downgraded Italy’s and Spain’s credit ratings.
The troubled bank’s board of directors was to meet later Sunday in Brussels.
On the eve of the Berlin summit, International Monetary Fund chief Christine Lagarde, who was the first to call for banks to be urgently recapitalized, met the French leader in Paris.