Two world summits were held over the weekend, each addressing the current global financial crisis. G7 leaders and central bank governors, meeting in Washington, DC, and the finance ministers of the European area member states, meeting in Paris, underscored the need for coordinated government action to stabilize and rehabilitate the world’s financial markets.

The G7 statement indicates that governments are prepared to take all necessary actions to increase liquidity and protect consumer deposits. Following the same sentiment, finance ministers from the Euro area member states committed to act in concert to (i) ensure appropriate liquidity for financial institutions; (ii) facilitate the funding of banks; (iii) provide financial institutions with additional capital resources; (iv) allow efficient recapitalization of distressed banks; (v) ensure sufficient flexibility in implementing accounting rules; and (vi) otherwise enhance cooperation among European countries to develop procedures to combat the global crisis. Many European countries have already increased deposit insurance coverage and other programs to assist their respective banks and financial institutions.

The finance ministers meeting in Paris agreed that the Euro area member state governments “would make available for an interim period and on appropriate commercial terms, directly or indirectly,” guarantees, insurance or similar arrangements for “medium term (up to five years) bank senior debt issuance.”

News reports indicate both the German and French governments have introduced rescue plans. The German cabinet approved up to €400 billion to guarantee bank loans and provide €60 billion in government capital to German banks. The French government is reportedly offering €320 billion to guarantee bank refinancing and another €40 billion for government-backed financing. No official release from the two governments is currently available.