BBC News
June 29, 2012
In their agreement last night, European leaders in Brussels managed to exceed expectations, which had been set extremely low. But their terse statement leaves a lot of unanswered questions - especially when it comes to how and whether the eurozone's rescue funds will be used to bring down the cost of borrowing for countries like Spain and Italy.
Stocks are up, and Italian and Spanish ten year bond yields are down by around a third of a percentage point. By all accounts, investors are pleasantly surprised, but not all of them euphoric in their response to a statement which is little more than three paragraphs long.
None of those paragraphs, it is worth remembering, mention the issue that causes the most neuralgia for Germany: collective guarantees on eurozone sovereign debt.
In fact, short-term moves toward that - the creation of Euro-bills, for example - were barely discussed at last night's meeting, because Chancellor Merkel had made her position abundantly clear (see my blogs earlier this week on this).
So, what did they achieve?
First, and in the long term possibly most important, they have committed themselves to the idea of a single supervisor of eurozone banks - the European Central Bank - which could have the capacity to inject capital into troubled banks directly, without the debt going on to the books of the sovereign government.
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