Europe’s 13th crisis-management summit in 21 months explored possibilities of how to strengthen the International Monetary Fund’s role. The leaders excluded a forced restructuring of Greek debt, sticking with the tactic of enticing bondholders to accept losses to help restore the country’s finances.
The complete blueprint won’t come together until a summit in two days, giving German Chancellor, Angela Merkel, time to go back to Berlin to brief her lawmakers and seek their approval for the next steps. Like yesterday, it will start with all 27 EU leaders before the 17 heads of euro economies gather on their own. “Work is going well on the banks, and on the fund and the possibilities of using the fund, the options are converging”, French President, Nicolas Sarkozy, told reporters at the Brussels summit yesterday. “On the question of Greece, things are moving along. We’re not there yet.”
Bank capital needs - estimated at €100 billion by a person familiar with the deliberations - will be met first by banks themselves, then by national governments, the European officials agreed. Only when national efforts fail can governments tap the main rescue fund, the €440 billion European Financial Stability Facility, for cash to channel to banks. “What I can tell you is that this only will happen under strict conditions”, Dutch Prime Minister, Mark Rutte, said.
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