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Eurozone bends the rules to save single currency

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Eurozone bends the rules to save single currency
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At the end of a two-day summit, the eurozone has adopted a more flexible approach to tackling its crippling debt crisis.

The bloc’s future permanent bailout fund, the ESM, for instance, will be able to inject aid directly into banks from next year – without increasing a country’s budget deficit.

“Last night, we agreed that under certain circumstances and under certain conditions, the ESM could recapitalise banks directly,” EU Council President Herman Van Rompuy told reporters.

“The biggest and most important condition is setting up a single, supervisory mechanism for banks and eurozone leaders have asked the council to work in a very speedy way so that we can have results by the end of the year. This is a major breakthrough, I said it this night. It is a first step also to break the vicious circle between banks and sovereigns.”

Eurozone leaders also agreed to bend their aid rules to bring down borrowing costs for troubled member states.

The deal is widely seen as a political victory for embattled Italy and Spain over Germany’s Angela Merkel, who had brushed aside any need for such emergency measures earlier this week.