Special Report: Global Financial Crisis
Special
Report: Yearender
2008
by Shang Jun
BRUSSELS, Dec. 22 (Xinhua) -- The European Union
(EU)'s much-vaunted unity now is under a real test as a contagious financial
crisis unseen since the Great Depression has devastated the whole continent this
year.
Although efforts have been made to seek a coordinated
EU response to the financial crisis, split are emerging between member states as
they put their own national interests first.
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The logo of financial group Fortis NV is
seen at the entrance the company's headquarters in Brussels Dec. 14, 2008.
(Xinhua/Reuters Photo)
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EUROPEAN BAILOUT FUND REJECTED
Triggered by the collapse of the U.S. banking giant
Lehman Brothers, the financial turmoil escalated into a full-fledged crisis in
September.
As its financial system has been so interwoven with
that of the United States, the EU soon fell prey to the crisis, with its
financial institutions either exposed to huge losses in the U.S. financial
market or suffering severe shortage of liquidity.
Britain's mortgage lender Bradford & Bingley,
Dutch-Belgian banking group Fortis and French-Belgian bank Dexia became the
first European victims of the financial crisis, forcing EU governments to infuse
billions of euros to keep them afloat.
The initial actions were taken by individual or
several countries on an ad hoc basis. But cracks appeared in the EU's unity when
Ireland unilaterally guaranteed all deposits in its own banks to calm nervous
savers, a move siphoning safety-seeking money away from other EU banks.
The fragmented approach created the impression of
disorder and sent confused signals to financial markets, arousing concerns it
may further undermine confidence.
While the U.S. government unveiled a
700-billion-U.S.-dollar package to bail out troubled banks, a similar plan had
been floated for a joint EU fund.
But it was firmly rejected by Germany, which was reluctant to commit taxpayers' money to an EU-managed fund.
