Open

Coming up

Don't miss

Replay


LATEST SHOWS

THE INTERVIEW

Exclusive: Israel's US ambassador speaks to FRANCE 24

Read more

#THE 51%

World War One: The war that changed women’s lives

Read more

FRANCE IN FOCUS

Ségolène Royal goes for green

Read more

THE OBSERVERS

A look back at some of the Observers' best stories

Read more

DEBATE

Argentina Defaults: Kirchner Cries Foul Over 'Vulture Funds' (part 2)

Read more

DEBATE

Argentina Defaults: Kirchner Cries Foul Over 'Vulture Funds'

Read more

AFRICA NEWS

Ebola death toll tops 700

Read more

AFRICA NEWS

Dozens of youths trampled to death on Conakry beach

Read more

MEDIAWATCH

Renault's women drivers ad deemed sexist

Read more

  • Exclusive: Israel's US ambassador speaks to FRANCE 24

    Read more

  • Live: Israeli soldier feared captured, ceasefire 'over'

    Read more

  • Ugandan court strikes down anti-gay legislation

    Read more

  • Regional summit to tackle deadly Ebola outbreak

    Read more

  • French hospital to open wine bar for terminally ill patients

    Read more

  • €2.5 million in cocaine ‘disappears’ from Paris police HQ

    Read more

  • Appeal court keeps French rogue trader Kerviel in jail

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • Ukrainian army suffers losses in separatist attack

    Read more

  • Dozens killed and injured in Taiwan gas blast

    Read more

  • Argentinian markets plummet following default

    Read more

  • French Jews speak of growing fear in Paris amid Gaza conflict

    Read more

  • Video: Inside Hamas ‘terror’ tunnels in Gaza

    Read more

  • Sierra Leone declares state of emergency over spread of Ebola

    Read more

Europe

Eurozone leaders head into critical summit on debt crisis

Video by Antoine MARIOTTI , Shirli SITBON

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)