The European Commission approved today German plans to support the shell-shocked financial sector with 400 billion euros ($500 billion) in state guarantees and 80 billion euros for capital injections.
"The package constitutes an adequate means to remedy a serious disturbance in the German economy while avoiding undue distortions of competition," Europe's top competition watchdog said in a statement.
Berlin hastily drafted the bailout plans earlier this month as the global credit crisis began bearing down on the German financial sector with banks reluctant to lend to each other in a climate of fear.
However, since the plans were rolled out, many banks remain wary of turning to the government for help over concerns about losing their autonomy and being stigmatised by peers.
Germany is to update the commission on the package every six months until the financial crisis is deemed to be over.