World leaders were on Sunday night scrambling to finalise rescue plans for their banking systems before stock markets open on Monday, amid fears that the global financial system is on the brink of collapse. France, Germany and Italy – as well as Britain – were working on dramatic plans, due to be announced Monday, to shore up their lenders. The moves came as a hastily arranged EU summit in Paris saw eurozone governments agree to offer hundreds of billions of euros in guarantees for new, medium-term bank debt issuance. In other moves, Norway announced it would offer its commercial banks up to $55.4bn in government bonds in exchange for mortgage debt and Portugal said it would make as much as €20bn ($27bn) available in guarantees for its banks’ financing. The US, meanwhile, was working to finalise a plan to recapitalise financial institutions that could be unveiled as early as Monday. Australia and NZ announced guarantees for all bank deposits, as did the UAE, while Saudi Arabia cut its interest rates.

This entry was posted by Gwen Robinson on Monday, October 13th, 2008 at 5:43 and is filed under Capital markets. Edit this entry.