“The ECB and Europe have decreed a state of emergency”, announces Les Echos. At his last meeting as head of the European Central Bank, outgoing President Jean-Claude Trichet “yesterday unsheathed a series of 'unconventional' monetary policy measures, such as he did during the 2008 crisis,” writes the business daily. The main measure is to allocate liquidity to the European banks most exposed to the debt crisis, for the next year or more. The other operation to address the lack of liquidity is the acquisition by the ECB, from November, of 40 billions euros in bank bonds, for a maximum of one year.

In parallel, the new European Banking Authority (EBA), should be reassessing the need for recapitalisation by including the “haircuts” imposed this summer on some sovereign bond markets, Les Echos adds. For its part, Commission President José Manuel Barroso on October 6 called for a renewed effort to recapitalise the banking sector in Europe. A meeting between Angela Merkel and Nicolas Sarkozy is scheduled for Sunday 9 to discuss the idea. In the discussions between the heads of state and governments at the European Council on 17 and 18 October, the recapitalisation of distressed banks should also be at centre stage.