BERLIN, Oct. 13 (Xinhua) -- German Chancellor Angela
Merkel announced here in Berlin a huge financial rescue plan worth close to 500
billion euros (about 685 billion U.S. dollars).
The entire rescue package amounts to about 20 percent
of Germany's gross domestic product.
"The move is to build trust in the banks and
economy," Merkel told a press conference here in Berlin, stressing that the
package is aimed at ensuring the stability of financial system in the biggest
economy of Europe.
Merkel said the German government would offer a
maximum volume of 400 billion euros (around 548 billion U.S. dollars) in
guarantees.
As the inter-bank lending market had practically come
to a standstill in Germany, Merkel said the guarantee would help it restart.
"Experience shows the guaranteed risk does not happen
in the rule, the 400 billion euros will not lead to matching expenditure by the
federal government," she said.
Merkel said 20 billion euros (about 27 billion U.S.
dollars) of the larger sum had been set aside in case any guarantees were in
fact called.
A separate fund of 70 billion euros (some 96 billion
U.S. dollars), with extra leeway of 10 billion euros (about 13.7 billion U.S.
dollars), is to be used to recapitalize banks.
Merkel said the government would thus have to
shoulder a total of 100 billion euros (about 137 billion U.S. dollars).
Merkel also said the overall rescue package, approved
by her cabinet on Monday, would be voted at the German parliament on Friday.
Merkel noted that her government would set up a new "
constitution" on financial market in the country, so as to ensure the
transparency of the financial market as well as to monitor the market.
Local media revealed that the German government
intends to create caps on the wages of the senior governing members of various
banks and financial institutions.
Merkel said she aimed to secure passage of the new
legislation by Friday at the parliament, when the law on a "new constitution for
the financial markets" would take immediate effect.
