European leaders agree on inter-bank loans

Dutch banks on Monday welcomed the decision by European leaders to guarantee inter-bank loans up to the end of 2009 in an effort to restore confidence in the financial markets.

‘It is good that there is a coordinated European plan which can help restore calm and stability,’ a spokesman for the Dutch banking association told the Telegraaf.

On the Amsterdam stock exchange, traders reacted positively to the deal. By 3pm, the AEX was up 6.5% at nearly 275 points.

On Sunday, prime minister Jan Peter Balkenende said the deal, thrashed out between the 15 eurozone countries in Paris, said the deal was extremely important.

Money movements

‘Money has to move between banks again, that makes the economy stronger and offers more financial opportunities,’ Balkenende was reported as saying by the Financial Dagblad. ‘If there is no credit any more, financial resources will dry up.’

European leaders also agreed that no big financial institution will be allowed to collapse. And they pledged to put money into banks by buying preference shares.

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