23 Oct 2011

EU finance ministers take step towards stabilising crisis

3:58 pm on 23 October 2011

European Union finance ministers meeting in Brussels have taken a step towards stabilising the eurozone debt crisis.

A provisional deal will see banks raise more than a 100bn euros in new capital to shield them against possible losses to indebted countries.

It is conditional on a wider accord, including a write-down of Greek debt.

The BBC reports that British Chancellor of the Exchequer George Osborne declared "real progress" after the meeting of European Union finance ministers.

UK banks will not need to raise any new funds, partly because they have not made substantial loans.

However, there's still no agreement on expanding the wider Eurozone bailout fund for indebted countries.

Greece gets another installment

On Friday night, eurozone ministers agreed to release to Greece another installment of a bail-out package agreed last year.

The payment must still be approved by the board of the International Monetary Fund.

A statement from the finance ministers also says there will be a second programme, to include what they call appropriate private sector involvement, understood to mean creditors taking losses.

There are reports those losses may need to be as much as 60%.