Financial Times
March 12, 2011
The heads of the eurozone’s 17 governments have agreed an unexpected deal in to assist the debt-laden economies of Europe’s periphery, agreeing to strengthen the bloc’s €440bn rescue fund and lowering the interest rates on Greece’s bail-out loans.
After talks into the early hours of Saturday morning, the leaders also backed a plan to use the rescue fund to buy sovereign bonds of struggling governments when they are initially auctioned, a measure that could allow countries with high borrowing costs to raise cash at much lower yields.
But the deal did not give the rescue fund broad new powers to purchase bonds on the open market, an option that had been backed by several European Union leaders, including Jean-Claude Trichet, the head of the European Central Bank.
It is unclear whether the measures will be enough to calm market concerns that heavily indebted Greece, Ireland and Portugal will be not able to meet their debt payments.
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