Eurozone leaders rise to challenge but details missing

BELGIUM: Economists and non-euro EU leaders cheered Friday's eurozone summit deal as a surprise “breakthrough” in efforts to preserve a stable currency, yet crucial details still need to be filled in. With market expectations low ahead of the European Union summit, a deal that bolstered confidence in the euro was wrenched after all-night talks between eurozone leaders, bringing swift relief to crisis-hit Italy and Spain.

The single currency leapt in value and bond yields tumbled as it appeared that politicians might finally have got ahead of the markets, though it remained to be seen for how long.

EU president Herman Van Rompuy hailed a “real breakthrough” in efforts to prevent future crises as the 17 eurozone members agreed to let the future European Stability Mechanism (ESM) recapitalise ailing banks directly.

That means ESM credits will not pass through national budgets, which in a vicious circle simply adds to the sovereign debt of struggling countries. Spain, which has been promised loans of up to 100 billion euros ($126 billion) for its ailing banks was the main beneficiary, but the move could also mean crucial relief for Ireland, where government backing for banks plundered the nation's accounts.

Observers suggested that Dublin might now be able to access private credit this year, which could show EU partners and the world that one bailed-out eurozone country's problem was finally being sorted out. AFP