(LISBON) - Portugal's finance minister announced Sunday that his government was offering a 20-billion-euro (27-billion-dollar) state guarantee for banks endangered by the global financial crisis.

"In order to reinforce our financial system, the government has decided to launch an initiative guaranteeing the financial operations of credit institutions whose headquarters are in Portugal," Fernando Teixeira dos Santos said after a ministerial meeting on the crisis.

"These state guarantees will be up to 20 billion euros," he said.

While calling Portugal's financial system "solid," the minister said the measure was necessary due to the global crisis that has dried up lending between banks and threatened the wider economy.

"In the national and international inter-banking market, financing transactions have been strongly reduced," he said.

"Because of that reality, it was essential to create conditions to allow for a revival of inter-banking market transactions."

The minister said the measure was aimed at "facilitating banks' access to liquidity" to create "conditions that allow them to finance economic activity.

"The guarantee basically means that if a banking institution is incapable of meeting its commitments, the state will take responsibility," said dos Santos.

The announcement came as European leaders began a summit in Paris on Sunday that would mark their last chance to hammer out a coordinated bank rescue package before their panic-stricken stock markets reopen.

Europe appears to have decided to follow Britain's lead in providing funds to not only prop up individual banks, but to free up the vital short-term loans between institutions that keep capital markets moving.

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