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Soros tells Europe to bolster banks

FRANKFURT, Jan 19, 2011 – US billionaire George Soros urged Europe Wednesday to recapitalise its banks in addition to creating a new aid programme for heavily indebted countries.

The iconic investor, who is of Hungarian origin, said efforts by European Union leaders to resolve a persistent 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 signaled 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 in 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 said that the rate of interest charged to countries that ask for help from the European Financial Stability Facility should be lowered, adding that a failure to act could result in a real danger to the European Union\’s social and political unity.

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