Eurozone finance ministers have signed off on a 500-billion-euro safety fund to stave off future crises within the single currency zone. The announcement comes amid concerns over the strength and stability of the euro.
Rehn, left, and Juncker say the agreement rules out uncertainty over the euro
The finance ministers of the eurozone countries have finalized the details of a 500-billion-euro ($597 billion) plan designed to prevent further financial crises in the bloc.
The ministers signed the deal in Luxembourg on Monday that will see 440 billion euros supplied through market loans, and a further 60 billion euros from the European Union’s budget. The International Monetary Fund (IMF) said it would supply a further 250 billion euros to the package.
German Finance Minister Wolfgang Schaeuble said the funds were to ensure the stability of the euro, adding that “global markets wanted not only words, but also action” taken by Europe.
The deal was agreed in principal almost one month ago, with the details to be worked out at Monday's finance ministers’ meeting.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said the agreement showed there was "no uncertainty left" about Europe's capacity to deliver on its promises.
Also at Monday's meeting there was confirmation that EU-member Estonia had met all the criteria to adopt the euro.
"So Estonia will become the 17th member of the euro area on January 1, 2011," said Luxembourg Prime Minister Jean-Claude Juncker, who is also the Eurogroup president.
Schaeuble says the eurozone states moved to ease market concerns
The announcement comes as fears over the stability of the euro currency continue. The euro dropped to below $1.19 in Asian trading for the first time since 2006 early on Monday, and later stabilized at that level in European trading.
Earlier Monday, Commissioner Rehn had raised concerns about the rapid drop in the euro’s value, saying that "it's rather the pace of the evolution than the level that's been of concern," according to news agency AFP.
Rehn warned that more "turbulence" lay ahead for the eurozone unless all EU counties adopted "restrictive" budgetary policies. Hungary is the latest EU member to be thrown in the spotlight over its economic stability, with comparisons being made between its debt problems and those of Greece.
Hungarian officials had earlier warned that their country was falling deeper into debt, but have since moved to play down those fears, stressing Monday that the country's fiscal situation was nowhere near as bad as that of Greece.
At the heart of concerns are fears that the debt problems of EU countries could tip the bloc back into recession and place an unsustainable political strain on member states, threatening to tear the union apart.
Author: Darren Mara (AFP/Reuters)
Editor: Chuck Penfold