Don't miss

Replay


LATEST SHOWS

FRANCE IN FOCUS

La vie en gris: The story behind France's famed rooftops

Read more

REPORTERS

Video: Olympic refugee team goes for gold

Read more

FOCUS

Taiwan's nuclear dumping ground

Read more

ENCORE!

Greece: Creativity in a time of crisis

Read more

BUSINESS DAILY

French growth grinds to a halt over strikes

Read more

IN THE PAPERS

Norway will 'move mountains' for Nordic neighbour Finland

Read more

IN THE PAPERS

French media ban on naming jihadists: 'Good intention, bad result'

Read more

EYE ON AFRICA

Gigantic snails are a delicacy in Ivory Coast

Read more

MEDIAWATCH

Hollande and Valls tell Trump: 'France is still France!'

Read more

Europe

Eurozone leaders head into critical summit on debt crisis

Text by News Wires

Latest update : 2011-07-21

Eurozone leaders entered a critical summit on Thursday in the hope of finding a solution to reducing Greece's debt mountain amid nervous markets. French and German leaders agreed the night before to a common plan for the meeting.

AP - Eurozone leaders are moving closer to signing off on a second bailout for Greece but markets are fretting that any deal that emerges later Thursday may imply a Greek debt default after a plan to slap a tax on banks appears to have been shelved.

Reaching a deal – it had looked unlikely earlier this week – became easier after Germany and France agreed on a common position on how to get banks and other investors to share the burden of a second rescue during last-ditch talks in Berlin Wednesday.
 
The offices of German Chancellor Angela Merkel and French President Nicolas Sarkozy did not release any details on their common plan, but the prime minister of Luxembourg said it was unlikely to include a tax on banks to help pay for the second rescue package.
 
“I have the impression that there is no agreement on a banking tax,” Jean-Claude Juncker, who as the chairman of the Eurogroup is one of the key officials of the currency union, said as he arrived in Brussels.
 
Juncker’s comments sparked a bout of euro selling in the markets, as investors now think that any private sector involvement may well mean that the credit rating agencies will consider that Greece will be in default of its debts. By late morning, the euro was 0.8 percent lower at $1.4150, having earlier traded above $1.42.
 
Juncker conceded that the final deal could well see the agencies slapping a “selective default” rating on the country.
 
That could trigger fresh financial turmoil, especially if the European Central Bank insists on cutting Greek banks from emergency support, as it threatened to do if the country is considered to be in default.
 
Leaders have been struggling to find an agreement that makes sure that banks and other private investors help pay for a bailout, without triggering panic on financial markets that the crisis could spread to larger economies like Spain or Italy.
 
Juncker also said that any deal should include more “flexibility” for the currency union’s bailout fund. Such flexibility is usually shorthand for lower interest and longer maturity for bailout loans as well as wider powers for the fund, such as the ability to buy up distressed bonds.
 

Date created : 2011-07-21

  • EUROPE

    Sarkozy, Merkel reach accord on tackling debt

    Read more

  • EUROZONE

    Merkel warns upcoming EU summit not a panacea

    Read more

COMMENT(S)