May 10, 2010
The European Union Council and its member states have agreed on a financial-stability package of up to €500 billion ($633 billion) to prevent a run on euro-zone countries with rickety public finances. The emergency fund consists of €60 billion of support financed by EU bonds, and €440 billion of loan guarantees from the euro area. The IMF may provide a further slug of assistance worth €220 billion. Separately on Sunday 9th May, Greece received a €30 billion loan from the IMF to help avoid a sovereign default, part of a three-year joint EU financing package. Markets responded positively. On Monday morning European stockmarkets enjoyed a rally and yields on two-year Greek government bonds fell by more than half. The euro strengthened against the dollar to $1.30, after falling to $1.27 on Friday, a 14-month low.
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