EU secures massive emergency package

09:46, May 11, 2010      

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Europe Monday announced a $1 trillion rescue package for crisis-hit euro countries backed by the IMF and central banks worldwide, stemming a crisis that threatened to derail the global economic recovery.

Leaders hope an unprecedented international intervention, officially running to more than 750 billion euros, will represent a game-changing financial war chest.

Essentially, Europe wants to leverage vast borrowings to prop up nations the way governments did their banks during the global financial crisis - keeping interest rates down.

European Union finance ministers agreed, after marathon talks lasting more than 11 hours, that 440 billion euros ($571 billiion) would come from the troubled eurozone plus another 60 billion euros ($78 billion) from European Commission coffers.

That would be backed by "at least half as much" again from the IMF, or another 250 billion euros ($324 billion).

The overall package was described as a series of "far-reaching steps" by IMF managing director Dominique Strauss- Kahn.

The plan "proves that we shall defend the euro whatever it takes," said the EU's commissioner for economic and monetary affairs, Olli Rehn.

The European Central Bank joined the central banks of Britain, Canada, Switzerland, the United States and Japan in coordinated moves aimed at nudging global money, debt and currency markets forward, which drew ringing endorsements from the Group of 20 leading world economies.

Meanwhile, the IMF's executive board approved a record 30-billion-euro ($39-billion) loan for Greece as planned.

A statement issued by South Korea, which will chair a G20 summit in November following a summit hosted by Canada next month, said members remain "strongly committed" to working together to maintain global financial stability.

"China firmly supports the above actions and believes that each member of the eurozone can overcome the difficulties and realize stable economic growth," ChinesePremier Wen Jiabao said in a phone call to Spanish Prime Minister Jose Luis Rodriguez Zapatero.

Shortly after the package announcement, European central banks began buying eurozone government bonds as agreed under the rescue plan.

German Chancellor Angela Merkel said that the emergency rescue package for crisis-hit eurozone countries would serve to bolster the weakened euro.

With her cabinet examining the necessary legislation today to push through Germany's part of the $1 trillion rescue package, Merkel told reporters, "We are protecting our currency in an extraordinary situation."

"This morning's agreement will ensure that any attempt to weaken the stability of the euro will fail," European Com-mission president Jose Manuel Barroso said in Brussels hours after the deal was brokered.

Source: Global Times
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