Germany has committed up to 500 billion euros for a massive financial rescue plan for the country’s troubled banks. It represents a U-turn by Chancellor Angela Merkel, who had been reluctant to see large amounts of public money thrown at the problem.

She explained the plan by saying: “The federal government measures are to support the stability of the markets. They are to protect the people and the people’s interests, not the banking industries interests. The federal government’s guarantees are a confidence-building measure, they should stabilise the financial systems and restore the flow of loans to companies.”

Echoing statements from other Europe governments, Germany’s Finance Minister Peer Steinbrueck called for limits on the pay of executives whose banks use the government rescue package. And he said they should get no bonuses or severance deals.

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