GLOBAL FINANCIAL CRISIS, PART 1: The US taxpayers� $700 billion will not end the meltdown by itself. Only time will tell if that is enough to allow international banks to start lending again. Meanwhile, in Europe, the efforts remain very much behind the scenes. Westminster Editor James Cusick reports

After asking US taxpayers to bail out Wall Street's banks with a cheque for $700 billion, President George Bush warned yesterday that despite the Congressional deal that finally passed the US Treasury's rescue plan, it will still "take time and determined effort to get through this difficult period."

The Emergency Economic Stabilisation Act, put together by US Treasury secretary Henry Paulson, was almost sold to the US electorate as an instant cure for America's ailing banking system. But Bush's blunt warning, made from his ranch in Texas, that there were still "serious challenges ahead" suggests the $700bn bail-out won't end Wall Street's problems.

European leaders meeting in Paris yesterday appeared to back up Bush's forecast that global markets would remain struggling and would still require more interventionist aid by central banks. But after last week ditching the idea that a co-ordinated European response should raise 300bn to be put into a collective European Union rescue pot to match the Paulson plan in the US, the leaders of Britain, France, Germany and Italy, along with key EU finance chiefs, could not even agree on a smaller-scale rescue deal.

French president Nicolas Sarkozy, who organised the Paris mini-summit at short notice with the aim of forging some sort of financial consensus ahead of this week's G8 gathering in the US, is said to have favoured a big-scale pan-European rescue operation.

But after the cool response from Gordon Brown and the UK chancellor, Alistair Darling, and the clear message from Germany's chancellor, Angela Merkel, that it was down to the banks, not the state, to restore trust that had been "gambled away", Sarkozy focused instead on improving co-operation as each EU member state struggles with its own ailing markets. The French president hopes the talks in Paris will agree that some form of national intervention is used across the EU when European banks' futures are threatened.

The French prime minister, François Fillon, said with the world on the "edge of the abyss", France would be proposing measures to unfreeze credit and co-ordinate economic strategies. This is a steep climb-down in ambition from an EU equivalent of the Paulson plan.

The British prime minister, Gordon Brown, has also steered clear of large pan-EU solutions and proposed only a limited deal in Paris.

Speaking in London ahead of the talks, Brown said he wanted the early release of 15bn to help fund struggling small businesses hit by the shrinking availability of credit. The deal is not new money but centres on a fund already set up by the European Investment Bank that was supposed to be spreading the financial aid over the next two years: Brown simply wants the 15bn to be made available earlier than scheduled. He said this fast-tracked assistance would mean "small businesses in our country and the rest of Europe can get money immediately so that they can continue to employ staff and continue to provide services."

The EIB is the long-term lending bank of the EU. But even if Brown were to secure agreement this weekend with France, Germany and Italy, there is no guarantee it would be passed formally by the EU as a whole.

The limited gathering has been criticised by the European parliament as having no authority to decide anything for the rest of the European Union. So with no broad agreement between the four nations represented in Paris, and no wider agreement with the rest of the EU, it is still only individual countries' response to their own banking crisis and the huge US rescue package that is in focus.

Last month central banks, including the Federal Reserve in the United States, and the Bank of Japan, joined the Bank of England in injecting £100bn into money markets. The Bank of England pumped in £22.3bn, with parallel action taken by the Fed, the European Central Bank, and the central banks in Canada, Japan and Switzerland.

Last week the Dutch government stepped in to help the Belgo-Dutch financial services group Fortis with assistance totalling $23.3bn. The deal involved a part-nationalisation of Fortis and was one of five similar rescue operations across Europe over last week which totalled $100bn.

But a pan-European or EU bail-out plan remains elusive.

Falling short of agreeing on a EU-wide deal, the Paris talks will instead focus on the fallout from the actions of the Irish and Greek governments, who unilaterally guaranteed all deposits held in their national banks. The moves, criticised by angry finance ministers across Europe, provoked a surge in deposits flooding into banks in Ireland, and to a lesser degree Greece.

In Paris yesterday, Sarkozy said what was required was "an intense effort to co-ordinate Europe's response".

The managing director of the International Monetary Fund, Dominique Strauss-Kahn, speaking before the Paris talks, hinted that Europe had so far not been able to match the US in the scale of the rescue efforts in its own markets.

"We have to make sure Europe takes its responsibilities like the US," he said. He added that the crisis was also "trail by fire" for the euro.

With one Sarkozy aide accepting that France, Germany, Italy and Britain were "not going to save the world", the words coming out of Texas from President Bush gained greater significance, coming a day after the $700bn deal was agreed on Capitol Hill in Washington.

Bush said America's long-term economic growth would be helped, and the deal would immediately address the needs of the US finance system. "While these efforts will be effective, they will also take time to implement," he warned.

Bush promised US taxpayers that the financial rescue plan will be mounted at a "careful and deliberate pace" to ensure that "tax dollars are spent wisely".