German Chancellor Angela Merkel has pledged to defend the euro after European leaders agreed to a new set of rules on bailout.
“We will do everything to secure the financial stability of the euro as a whole,” she said.
The deal European leaders have sorted out to backstop the monetary union looks near-exactly like her 9-point proposal on the issue. It does not include a eurobond scheme or a real program for further fiscal union. Rather it lays out in more clear detail a permanent €750 billion fund to finance bailouts. The fund will be in place by 2013.
The debate broke down to a north-south argument, with Northern European countries calling for more cuts by the fringe and southern states calling for more long-term measures, like the eurobond.
It looks like Merkel has won this round. But what’s really of concern is whether or not the region can get to 2013 before something (Spain) explodes and needs a much bigger bailout then is already planned for.
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