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Posts Tagged ‘Europe Bailout’

EU mobilizes €120 billion for growth

Posted by Ram Kumar Shrestha on June 29, 2012

EU officials have agreed to spend €120 billion “for immediate growth measures” to aid the most vulnerable countries of the eurozone. The announcement comes during the latest EU summit that has started in Brussels.

European Council President Herman Van Rompuy made the announcement at a summit press conference on Thursday. The leaders of Spain and Italy were reportedly blocking a final agreement on a stimulus package until they won promises of immediate help in reducing their borrowing costs, AP reports.

However, after a tough night of bargaining, an agreement was reached that would allow loan money to be provided directly to troubled banks, circumventing European governments as middle men in the bailout process.

Allowing money to be funneled directly to the banks was seen as a way to keep investor interest rates down by removing the debt from European governments; loans provided to governments might cause investor doubt, therefore driving interest rates to unsustainable heights. The move was beneficial for Spain, which has been seeking €100 billion in loans for its troubled banks.

Another key part of the agreement was a reversal of EU policy stating that any new bailout applications would not be met with the same strict conditions that were imposed on previous bailout requests. This move was seen as one designed to placate Italy, who insisted that despite its troubled economy, it was not seeking a bailout at this time. Read the rest of this entry »

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