EU leaders meet over Stage 2 of bank crisis

EU leaders are meeting at a crunch summit in Brussels to move forward over the banking crisis.

As the bell rings on round one of the global banking crisis, with a points victory for governments buying into banks, pumping liquidity into markets and guaranteeing interbank loans, the summit will look at moving on and assessing the fallout of the turmoil.

Over the last week EU states have spent over €2 trillion (£1.5 trillion) to support their banking systems.

Gordon Brown highlighted the significance of the last few days, speaking before the summit.

"We have made decisions that matter for what will happen for next few years. We see economies taking action around the world," the prime minister said.

"Today is an important moment – all 27 countries meeting – I hope we find agreement with all countries."

He added the first stage of the crisis has been passed – with stabilisation achieved – but the nations of Europe and the world have to step forward for stage two.

"Just as Europe has moved together on stage one – we must do so too on stage two.

"Stage one was to stabilise the financial system with liquidity, recapitalisation and trying to get funds moving for small businesses and consumers. Stage two is to make sure that the problems of the financial system - which started in America - do not recur again.

"We need supervision and regulation where it has been lacking and where it is necessary, and international co-operation. We need an early warning system and proper co-ordination."



He also called for international co-operation to route out excesses in the financial system and increase supervision – with early warning systems on problems and rebuilding of the IMF.

The prime minister warned of further losses in the coming weeks around the world.

European Commission president Jose Manuel Barroso said: "Now we need to take it to next level. An urgent priority is further co-operation on international level – especially with the US.

"I am happy to see a convergence of views."

The summit will also focus on negotiating climate change and energy packages, as well as the future of the Treaty of Lisbon and relations with eastern neighbours following the conflict between Russia and Georgia.

Mr Barroso also pushed for the environment not to fall off the agenda – saying it wasn't an aperitif.

Mr Brown said: "It is not time to abandon climate change – oil prices have increased massively.

"Climate change is part of the solution for many of the problems we see."