The main points of the discussions surround three issues - the recapitalisation of the banks. This will act as a firewall against contagion from debt ridden countries.
The second area is a bank 50 per cent write-off of Greek debt with the remaining possibly being given preferable rates of interest.
And the third being the boosting of the bail out fund. The EFSF was previously 440 billion euros but through offering insurance to purchasers of euro zone debt or via a so called special purpose investment vehicle this will be boosted to one trillion. The latter aims to attract investment from China and Brazil.
Brussels summit agrees on bank recapitalisation strategy
An agreement on the recapitalisation of Europe's banks has been reached at the debt summit in Brussels. All 27 European leaders have come up with a plan stating the amount of money banks hold as a buffer will have to be raised to nine per cent by next June.
British Prime Minister David Cameron said he was satisfied with the outcome: "Well we made good progress tonight. It's very much in Britain's interest that we sort out these problems and solve this crisis. We made good progress on the bank recapitalisation that wasn't watered down. It has now been agreed."
On just one day in June, banks will have to prove they can meet the nine per cent target. The buffer is a temporary measure to show that banks would be able to withstand more shocks - which could come from the possible writing-off of Greek debt.
Polish Finance Minister Jan Vincent-Rostowski said the nine per cent would not be a continuous requirement: "It is very important that this buffer and this calculation will be made once. It will be a one-off-exercise. This obligation will not be repeated in the future."
Where the money will come from is uncertain. The banks can not get it by pulling it from subsidiaries - a detail insisted on by eastern European countries, where several banks are tied to major European finance houses.
Speaking from the summit in Brussels, euronews reporter Paul Hackett said the plan needs to be looked at closely: "Restoring confidence in Europe's banking sector was seen as one of the key elements to solving this crisis. While a deal appears to have been reached, it's still unclear how this will be achieved. As always, the devil will be in the detail."
SOURCE: Euronews
