Eurozone leaders emerge with plan to stem debt crisis

It's all good–with a little help from China

After marathon negotiations, and tensions that flared up into an epic fist fight among Italian lawmakers on Wednesday, eurozone leaders announced on Thursday morning that they have reached a deal to shore-up Greece’s debt, and increase the firepower of a fund meant to prevent contagion to other troubled European economies. The agreement sees private investors accepting a 50 per cent loss in the face value of their Greek bonds, a measure expected to reduce the country’s debt levels to 120 per cent of GDP by the end of the decade, according to the Financial Times. European leaders also said they would provide risk insurance over new bonds issued by countries struggling with high-level debt, such as Italy, a mechanism believed to boost the eurozone’s bailout fund to about $1.4tn. French president Nicolas Sarkozy called his Chinese counterpart, Hu Jintao, shortly after the deal, in what analysts say may be an attempt to get China to help bankroll the EU’s plan to rescue Greece, the Wall Street Journal reports. Prime Minister Stephen Harper expressed “cautious optimism” about the eurozone deal.

The Financial Times

The Wall Street Journal

The Canadian Press

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.