In a statement, a spokesman for Angela Merkel, the German chancellor, said that a summit meeting planned for this weekend would be used to examine proposals to strengthen banks, increase the clout of the euro bailout fund, and better coordinate euro area economic policy.

But a decision will not come until a second summit meeting to be held no later than Wednesday, the statement by a government spokesman, Steffen Seibert, said. The French government issued a nearly identical statement.

The last-minute delay reinforced fears that European leaders are still far from containing a crisis that has become a threat to the world economy. “The politicians have been trying to solve the crisis, but a consistent effort has been missing,” Andreas Dombret, a member of the board of the German Bundesbank, told an audience in Berlin on Thursday, in an unusually sharp criticism by a central banker of his political counterparts.

Analysts agree that a comprehensive crisis package would include further debt relief for Greece, a more convincing bailout fund for the overindebted countries, and some means of removing doubts about the creditworthiness of Italy and Spain.

It would also include a plan to address the underlying causes of the crisis, namely the lack of any effective way to enforce budgetary discipline among euro members, and a plan to restore growth in countries like Greece and Portugal that have lost international competitiveness.

After all the face time that political leaders have already had this week, and plan to have starting Friday evening, the signs of disarray are unsettling. The French president, Nicolas Sarkozy, stoked expectations for progress Wednesday when he flew to Frankfurt for a brief meeting with Mrs. Merkel as his wife, Carla Bruni-Sarkozy, was giving birth to a daughter back in Paris.

The discussions this weekend will begin Friday evening with a meeting of euro area finance ministers. On Saturday, finance ministers from the European Union as a whole will meet. Mrs. Merkel and Mr. Sarkozy will also meet. On Sunday, heads of state or government from the Union, the European Council, will gather in the morning. Then there will be a meeting of just the 17 euro area leaders.

By saying they need more meetings next week, the leaders drew out the suspense and created the impression they were having trouble agreeing on details.

There is broad agreement on the need to restock capital cushions at European banks so they could withstand a default by Greece. But agreeing on how much money banks should raise, and where the money should come from, is another matter.

Goldman Sachs estimated the amount at €300 billion, or $412 billion, which would have to come from capital markets, or as a last resort, taxpayers. Other estimates range as low as €100 billion and as high as €400 billion, depending on assumptions about how deep a loss banks must absorb on holdings of Greek and other government debt.

European officials, according to people involved in the discussions, are leaning toward the low estimates, which would be easier to raise but might not be enough to rebuild faith in European banks and restore their access to international money markets.

Banks are fiercely resisting attempts to make them raise more capital, which would cut into profits and expose them to government control if they cannot raise what they need from private investors. There are questions whether governments have the legal authority to force recapitalization.

Meanwhile, negotiations to get banks to take bigger losses on their investments in Greek debt “are making very little progress,” said a banker with knowledge of the discussions, who spoke anonymously because the talks are still ongoing.

E.U. officials hope to reduce the amount of money that Greece owes the banks so that the country, which is virtually bankrupt, might be able to get back on its feet more quickly. This summer, banks agreed to take losses estimated at about 21 percent, but with Greece’s economy getting worse by the day, some policy makers now want the banks to accept losses on their holdings of Greek debt of between 50 to 60 percent.

Article source: http://www.nytimes.com/2011/10/21/business/global/eu-postpones-decision-on-how-to-deal-with-crisis.html?partner=rss&emc=rss