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Eurozone Agrees on Permanent Bailout Fund

Service : Economy
TEHRAN, March 25 (ICANA) – After months of discussions, the European Union has finally agreed on the finishing touches of its permanent bailout fund.
Friday, March 25, 2011 12:40:51 PM
Eurozone Agrees on Permanent Bailout Fund

The decision came at a meeting of the EU heads of state and government in Brussels.

The permanent bailout instrument will be put in place in 2013 to rescue, if necessary, the countries using the euro - 17 of them right now.

The leaders agreed that Eurozone nations will start contributing to the fund in 2013 over the course of five years. They also decided on the exact amount the fund will be able to loan.

The Eurozone's temporary rescue facility, which for now has 250 billion Euros, will expire in 2013. The temporary instrument was established last year to rescue two Eurozone members - Greece and Ireland. Economists agree that having these bailout funds is important.

In fact, Portugal, which many believe may be the next in line for a bailout, has come under more pressure.

On March 23, the country's prime minister stepped down after the Portuguese parliament rejected his new round of austerity measures. However, EU leaders said they did not discuss the possibility of a Portuguese bailout at the summit.

But many are getting increasingly concerned that Portugal might in fact need a bailout because the resignation of the prime minister has made the markets even more nervous about the economic stability of this already troubled country.

The leaders also agreed to increase economic coordination in the Eurozone in areas such as taxation and retirement policy. Currently, the 17 nations that use the euro have different rules on those things, making it hard for them to sustain a common currency. The meeting also led to an agreement for greater economic surveillance of the EU's national economies.

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