Eurozone Meeting Up - What has been agreed?

We've seen the market cheer for some agreement made by the EU leaders and last week alone, the Eurostoxx 50 equity index shot up for 3.5%. According to BNP Paribaz, they think that the summit results are broadly in line with expectations and another step in the right direction yet some important loose ends still remains.

So let's take a look at what has been agreed by the EU summits.


1. Recapitalisation of the banking sector - Banks need to have a capital ratio of 9% after accounting for the market valuations of sovereign debt exposure. They're given eight months to reach this target ratio and they will need to use private sources of capital which includes of restructuring existing debt into equity. 


2. Further restructuring of Greek debt - In 21 July, the private sector involvement in Greece's bailout was set at 21%. Latest statement confirmed that writedowns of 50% are announced. This will secure continuous decline of the Greek debt-to-GDP ratio. Additional bailout package for Greece will amount to EUR 130 billion. 

3. Increasing EFSF (European Financial Stability Facility) Power by acting as an insurer of newly issued government debt and being an SPV (special purpose vehicles) for all private and public financial institutions.