Package

Germany creating up to $543 billion rescue package

German leaders worked Monday to tie up a rescue package for their banking system that officials said could be worth as much as $543 billion — part of a coordinated effort to shore up the euro zone's financial sector.

Conservative Chancellor Angela Merkel met with her center-left vice chancellor, Frank-Walter Steinmeier, and Finance Minister Peer Steinbrueck late Sunday to start hammering out the deal.

She planned a special Cabinet meeting on Monday to wrap up details of Germany's package, after European Union leaders agreed Sunday to coordinate national efforts to restore confidence.

The government has yet to give concrete details, but Volker Kauder, parliamentary leader of Merkel's conservative bloc, said it would involve a sum in the "mid-three-figure billions" of euros.

"Whether it is euro250, euro300 or even up to euro400 billion (US$543 billion), it is are huge amount," Kauder told ARD television. He indicated the money would be pledged in the form of a government-backed guarantee among other measures aimed at helping to shore up the nations' banks.

"We are assuming ... that the banks will regain trust in one another and will start lending to each other again," Kauder said.

Germany's two houses of parliament are to take up the package by the end of the week.

The governments of Italy, France and others were also were expected to present their measures on Monday. The rest of the 27-member EU will have a chance to sign up to the measures when they meet Wednesday.

(Published by AP - October 13, 2008)