Global Biz
Rescue mechanism set to safeguard euro
(Xinhua)
Updated: 2010-05-10 10:52
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BRUSSELS - European Union (EU) finance ministers agreed early Monday on an unprecedented rescue mechanism worth up to 750 billion euros ($956 billion) to prevent spread of the Greek debt crisis and rebuild confidence in financial markets.
At a news conference following the extraordinary meeting, European Economic and Monetary Affairs Commissioner Olli Rehn said that finance ministers decided to create a European Financial Stabilization mechanism to preserve financial stability in Europe.
Under the three-year Special Purpose Vehicle, the largest bulk of the 750 billion euros, or 440 billion euros ($560 billion) would come from bilateral loans from the 16 eurozone countries, said a statement issued after the meeting.
The European Commission would raise 60 billion euros ($76.5 billion) from financial markets on behalf of the EU, which means the borrowing would be guaranteed by all 27 EU governments.
The International Monetary Fund (IMF) is expected to provide as least half of the EU contribution, or 250 billion euros ($318.6 billion), the statement said.
Rehn said the mechanism, mainly based on the European Commission's proposal, was "not only about Greece, but also about the euro area as a whole" and showed EU's determination to "defend the euro whatever it takes."
