Oct. 12 - The head of the European Commission, Jose Manuel Barroso, says Europe must win back confidence by strengthening European banks. Kirsty Basset reports.
The head of the European Commission, Jose Manuel Barroso is calling for an urgent strengthening of Europe's banks, as part of his five point plan to rescue the euro zone from its mounting debt problems. (SOUNDBITE)(English) EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO SAYING: "For confidence to return we need to fix the sovereign debt problem which can only be done through a coherent package. And we must therefore strengthen the banks because in fact those two issues, the sovereign contagion and the banks are now, whether we like it or not, linked." He said national governments should support banks if investors can't be found - or receive assistance from the euro zone's bailout fund, the EFSF, if states aren't able to help. He also called for the early introduction of a permanent rescue fund, the European Stability Mechanism - and decisive action on Greece. As well as member countries' speedy adoption of beefed up powers for the temporary bailout fund, once it's approved by Slovakia. (SOUNDBITE)(English) EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO SAYING: "The strengthened and more flexible EFSF is in the interest of all euro countries, including, I am sure, the Slovak people. Our common currency plays a crucial role in investment decisions, in growth, in jobs all over Europe." He's calling on heads of state to back his plan when they meet in Brussels later this month. It came as ratings agency Standard and Poor's downgraded ten Spanish banks, including Santander and BBVA, with further downgrades possible, depending on the performance of the Spanish economy. Political uncertainties remain elsewhere, keeping investors on edge. Demonstrators outside the Bank of Italy protest the government's handling of the economic crisis, ahead of a vote of confidence in Silvio Berlusconi's government on Thursday. Kirsty Basset, Reuters.