TNBiz (TNBiz)
Markets  |  June 29, 2012 06:30:05

The eurozone has agreed a contract for growth, banking supervision and bank recapitalization of bailout funds


BRUSSELS (MEDIAFAX) - Representatives of the euro area in early Friday morning at the summit of the European Union in Brussels agreed on a contract for growth. He informed the President of the European Council, Herman Van Rompuy, quoted by AFP.

The contract will include the release amount of 120 billion euros(3.1 trillion dollars) to support economic growth, recapitalize banks and direct intervention of rescue funds to soothe the markets.

Politicians eurozone countries to come after the concert, which blockaded Spain and Italy. These countries conditioning its agreement with previously agreed financial injection for growth by adopting measures that would immediately help managing their debt.

Finance to be used primarily to support the production and creation of jobs.

Unused funds, according to Eurofound agreement diverted to the most vulnerable countries.

Statesmen, according to previous information, the President of the European Council also agreed to increase the capital of the European Investment Bank (EIB) to ten billion euros (258 billion dollars).

Plan was devised by leaders of France, Italy, Germany and Spain.

European leaders agreed at a summit of the European Union to create a single supervisory authority for the eurozone banks while allowing for emergency funds to recapitalize banks directly. Informed that on Friday, Reuters.

European Council President Herman Van Rompuy said that the aim was to create a monitoring mechanism to oversee the European Central Bank (ECB), and break the vicious circle between banks and state governments.

The European bailout fund will be used also to recapitalize banks facing problems.

"Then, when they could implement sight, it would be possible to directly use the resources of the European Stability Mechanism (ESM) to recapitalize banks," said Van Rompuy.

The European Commission should by eurozone leaders as soon as possible to see how the surveillance mechanism look like. Eurozone leaders also called on member countries to examine these proposals addressed with great urgency by the end of this year. Just create a single supervisory body is the first step towards establishing a European Union bank, which has been discussed as one of the tools to address and prevent crises that afflict mainly the euro area.

On the contrary, Czech Republic, however, the question of union bank critical. The reason for the different conditions in the various markets in Europe. "Well I understand the argument of the Czech National Bank , which says that if it were to be integrated control, so it is quite problematic that the costs of failure are possible at the national level. This is the hardest step, which will be very difficult to apply, "he said in early June National Coordinatorcom / courses-men / best-courses / EUR-Euro / "> changeover Oldřich Old Man.

According to him, the bank may have to promote union and the banks themselves. "Often it is disadvantageous for them when doing business on a European scale, and must adapt to other foreign standards, so it is also important for them integration," he said when the Old Man.

Possibility of direct recapitalization of the banks of a permanent euro zone bailout fund by a member of the Executive Board of the European Central Bank Benoit Coeureho should be part of a package of steps needed to solve the eurozone debt crisis. "Negative feedback between banks and governments ... can shatter the establishment of a real financial union," said Coeur specified in the text of speech at a forum in Rio de Janeiro.

"In my opinion, this involves creating a deposit insurance fund in the Eurozone and the solution framework in banks in the euro zone, supported by one central control system with decision-making," said Coeur.

Give power permanent eurozone bailout fund ESM apply capital directly into banks would Coeureho "also helped break the link between banks and governments."

Van Rompuy on Friday morning after a long night negotiations, announced that the country that will meet the budgetary rules and the EU, will have access to a temporary eurozone rescue fund, the European Financial Stability Fund (EFSF) and the permanent ESM fund to support their government bonds and bond on the financial markets.

"It's an option for countries that behave well in order to use the instruments of financial stability to satisfy the markets," said Van Rompuy. This should contribute to the restoration of stability in the bond markets.

Thomas bunny, kralicek@mediafax.cz

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