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Soros tells Europe to bolster banks

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Soros tells Europe to bolster banks

George Soros - Photo EC

(FRANKFURT) - US billionaire George Soros urged Europe Wednesday to recapitalise banks in addition to creating a new aid programme for heavily indebted countries, in a commentary published by a German newspaper.

The iconic investor, who is of Hungarian origin, said efforts by European Union leaders to resolve a dogged debt crisis was laced with errors.

"The rescue funds should not only be used to grant state credits, but also to recapitalise the banking system," Soros wrote in the business daily Handelsblatt.

"This would be an effective use of financial resources," he added.

In Brussels, EU finance ministers indicated Tuesday they were prepared to increase the lending capacity of an emergency fund for debt-laden countries in exchange for tough reforms to cross-border economic governance from all states.

For Soros however, "it would be better to inject capital into banks as fast as possible, and it would be better to do it at the European level rather than let each country act on its own."

The financier added meanwhile that the rate of interest charged to countries that ask for help from the European Financial Stability Facility should be lowered.

And he warned that failure to act could result "in a real danger that the euro attacks the European Union's social and political unity."

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