German Chancellor Angela Merkel and French President Nicholas Sarkorzy have said that they have finally reached an agreement on how to handle the sovereign debt crisis which has hit several European countries.
In a meeting on the 9 October in Berlin, the two leaders said that the crisis should be resolved before the G20 Cannes summit, which starts on 3 November. Both Merkel and Sarkozy were however careful not to reveal any details of the plan to recapitalise Europe's banks, though said details, including proposed spending, would be complete before the end of the month.
In the current climate, Germany has said that the recapitalisation of the banks should primarily be financed by the banks themselves and then by European governments. Merkel has also shown reluctance as to whether the €440bn rescue fund, the European Financial Stability Facility, should be used to recapitalise the banks or whether it should only step in as a last resort.
According to Christine Lagarde, head of the International Monetary Fund, the European banks need between €100bn to €200bn to pull them out the crisis.
The added urgency to address the crisis comes after the Franco-Belgian bank, Dexia collapsed last week.