Emerging from a summit in Paris, European government leaders pledged to bail out sinking banks and protect the interest of depositors in the wake of a global credit crunch whose effects are now being felt in Europe after wreaking havoc in US financial markets.

At the Paris summit, representatives of leading European economies deliberated on various options to deal with the worst financial crisis since World War II. Instead of a rescue plan in the manner of US government’s $700 billion bail out plan, they decided to work together to contain the economic fall out, relax accounting rules as well as impose stricter financial regulations.

A day after the Paris summit, several developments took place in the European finance sector which proved that the long-term impact of US market meltdown is far from over. BNP Paribas declared that it will take over the divisions of Fortis in Belgium and Luxembourg after government efforts to bail out the troubled bank came to nought. On the other hand, the government and financial institutions came together in Germany to raise a 50 billion euro or $68 billion rescue package for Hypo Real Estate Holding AG. The British government too declared that it will take all necessary measures to support its banking sector.