BRUSSELS (AP) — In one whirlwind morning, the European Union nations agreed on the foundation of a fully fledged banking union and Greece’s euro partners approved billions in bailout loans that will prevent the nation from going bankrupt.
The two measures approved by European finance ministers ended weeks of haggling over ways to deal with the three-year financial crisis. Their decisions free up EU leaders gathering for their summit later Thursday to concentrate on solving the region’s other economic and financial problems.
“Europe and the eurozone have proved that they are capable of eliminating the challenges that confront them,” said French President Francois Hollande.
A meeting of the 17 finance ministers from the EU countries that use the euro agreed early Thursday that Greece would get a total of (euro) 49.1 billion ($64 billion) between now and March, with (euro) 34.3 billion due in the coming days. Greece needs the money to stay afloat and avoid a potential default.
The approval of funds for Greece opens “the way for a return of confidence of investment, of growth and job creation,” said Olli Rehn, the European commissioner for monetary affairs.
The meeting of eurozone ministers came just hours after an all-night meeting of finance ministers from all 27 EU countries, including non-euro countries such as Britain and Poland. They agreed to create a single supervisor for banks, a key component of what many hope will eventually become a fully-fledged banking union — a single rulebook for all banks and coordinated plans for helping lenders in trouble.
“Piece by piece, brick by brick, the banking union will be built on this first fundamental step today,” said Michel Barnier, the EU Commissioner responsible for the monitoring of financial markets.
The agreement, which still has to be approved by the European Parliament, will make the European Central Bank the supervisor for banks in the eurozone and any other country in the EU that wants to opt in. It will give the ECB sweeping powers and also pave the way for Europe’s bailout fund to give direct aid to ailing banks — a measure that is vital to helping Europe dig out of its three-year-old debt crisis.
“We stick to what we promised,” said German Finance Minister Wolfgang Schaeuble. “Painstakingly, we advance the cause of Europe.”
Greece has been one of the biggest casualties of the European financial crisis which has left it dependent on funds from international rescue loans for the past two and a half years. The country had to commit to further austerity measures, which has contributed to a crushing recession.
Figures released Thursday from the Greece’s statistics office showed unemployment at a record high of 24.8 percent in the third quarter of 2012, compared with 17.7 percent in the same period a year ago.
In return for the money approved Thursday morning, which will see Greece through the winter months, the country also had to complete a bond buyback program, which is intended to lighten its crushing debt load. This week, the country said it would buy back (euro) 31.9 billion ($41.5 billion) of its bonds from private investors at a third of their face value.
Later Thursday, EU heads of state and government will gather in Brussels for a summit devoted to building closer fiscal, economic and political ties that will help the region avoid future financial crises. The establishment of a banking supervisor is an important part of this integration.