Eurozone laders agreed to "accelerate" plans to reduce public deficits |
Leaders of the 16 EU member states that use the euro have approved an 110bn euro ($145bn; £95bn) loan to Greece to prevent its debt crisis from spreading.
In return for the three-year loan, Athens must cut public spending.
The euro's value has fallen because of fears that countries such as Spain and Portugal could suffer similar problems.
The eurozone leaders also announced proposals for a European Stabilisation Mechanism to preserve financial stability.
'Serious situation'
At a meeting in Brussels on Friday, the eurozone leaders gave their approval to the EU-International Monetary Fund rescue package for Greece, and committed to "accelerate" plans to reduce deficits.
We have several instruments at our disposal and we will use them Jose Manuel Barroso European Commission President |
All institutions, including the European Central Bank, would use the "full range of means available to ensure the stability of the euro area", they said in a statement.
"We will defend the euro whatever it takes. We have several instruments at our disposal and we will use them," Mr Barroso told a news conference afterwards.
He declined to give any details of the plans, which will be presented to the finance ministers of all 27 EU member states at a meeting on Sunday, but said it would be done under "existing financial possibilities" in the budget.
The BBC's Jonny Dymond in Brussels says Greece's bail-out is requiring a lot more money than was suggested just a few weeks ago.
The financial assistance being offered is entirely without precedent - the hope is that it will stop the fears of default spreading from one indebted European country to another, our correspondent says. "[We] are full aware that we face a serious situation in the eurozone. It is about responsibility and it is about solidarity. We will face the situation together," said Herman Van Rompuy, the president of the European Council. The leaders hope to have the new European Stabilisation Mechanism, which would have up to 70bn euros at its disposal, in place before markets open on Monday to prevent investor fears over Greece spreading to other countries with high deficits, low growth or low competitiveness. Germany's Chancellor, Angela Merkel, said the mechanism would send a "very clear signal" to market speculators to back off. She had earlier spoken to US President Barack Obama, who called for a "strong policy response" extending to the international community. Source: BBC, 8 May 2010 02:04 UK, Newscribe : get free news in real time |
Recalled Greece went on a debt-funded spending spree, including high-profile projects such as the 2004 Athens Olympics, which went well over budget, now is under bailed out by EU, a good lesson to learn!
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Last week the markets were hammered due to the spreading of the Greek contagion with Euro falling , sovereign debt CDS of the PIIGS increasing daily and markets dropping at a frightening pace. Give this backdrop you would expect some sort of a Weekend Measure from the EU which has come in this form of a Stabilization Fund.Both the French and German leaders are going to defend the Euro against the “speculators”.More details later but I think most measures would provide only a temporary stablization at best. The EU problems will not stop unless they address the core problems.Rather than trying to solve the fundamental issues behind this crisis the European leaders are at their favorite pastime of blaming the “speculators” and the Markets.Read more at http://www.greenworldinvestor.com
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