EU leaders urge banks to use reserves

BRUSSELS, Jan. 20 (UPI) -- European Union finance ministers in Brussels endorsed a plan to encourage banks to use capital reserves for making loans.

"It's important that banks remember at a time like this that they can use their reserves to maintain lending," British Chancellor of the Exchequer Alistair Darling said, The Financial Times reported Tuesday.

With budget deficits rising, the ministers also pledge to return to fiscal constraints once the financial crisis abated, the Times said.

"The markets are already registering a certain risk. There are limits to the amount of borrowing that can take place. It's also a question of how long the markets are willing to finance such borrowing," Czech Finance Minister Miroslav Kalousek said.

The European Commission said Monday the budget deficit for the 16-nation eurozone would rise to 4.4 percent of its gross domestic product in 2010, up from 4 percent expected for 2009.