European Council's Statement On Greece's 109 Billion Euro Loan (EFSF), EUR/USD Charts and Articles

Source: The Council of the European Union
EUR/USD and stocks rallied yesterday on news that EU member states and the private sector would provide 109 billion euros of low interest financing to Greece to "fully cover the financing gap". The private sector will contribute 37 billion euros. Look how EUR/USD reacted to this news in the chart below. It is currently trading at 1.43841. I embedded the statement and linked to articles after the jump. EFSF = European Financial Stability Facility.


EURUSD Trend From 6/2010 (FreeStockCharts)
We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its Member States. We also reaffirm our determination to reinforce convergence, competitiveness and governance in the euro area. Since the beginning of the sovereign debt crisis, important measures have been taken to stabilize the euro area, reform the rules and develop new stabilization tools. The recovery in the euro area is well on track and the euro is based on sound economic fundamentals. But the challenges at hand have shown the need for more far reaching measures.

Today, we agreed on the following measures:


1. We welcome the measures undertaken by the Greek government to stabilize public finances and reform the economy as well as the new package of measures including privatisation recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to bring the Greek economy back on a sustainable growth path. We are conscious of the efforts that the adjustment measures entail for the Greek citizens, and are convinced that these sacrifices are indispensable for economic recovery and will contribute to the future stability and welfare of the country.

EURUSD July 21-22, 2011 (FreeStockCharts)
2. We agree to support a new programme for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap. The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to continue to contribute to the financing of the new Greek programme. We intend to use the EFSF as the financing vehicle for the next disbursement. We will monitor very closely the strict implementation of the programme based on the regular assessment by the Commission in liaison with the ECB and the IMF.

3. We have decided to lengthen the maturity of future EFSF loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years and up to 30 years with a grace period of 10 years. In this context, we will ensure adequate post programme monitoring. We will provide EFSF loans at lending rates equivalent to those of the Balance of Payments facility (currently approx. 3.5%), close to, without going below, the EFSF funding cost. We also decided to extend substantially the maturities of the existing Greek facility. This will be accompanied by a mechanism which ensures appropriate incentives to implement the programme."

"5. The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options further strengthening overall sustainability. The net contribution of the private sector is estimated at 37 billion euro."



Instant view: Greece bailout plan set at 109 billion euros (Reuters)
Europe announces a fresh, 'credible' Greek rescue deal (Deutsche Welle)
Greece debt swap details emerge as default looms (BBC News)
Greek contagion: CEE edition (Financial Times/BeyondBrics)
EU Leaders Offer $229 Billion in New Greek Aid (Bloomberg)
Zapatero Says Agreement Should Help Ease Spain’s Financing Costs (Bloomberg)
The European Financial Stability Facility (EFSF): Q&A (Telegraph)
UPDATE: Japan Welcomes Greek Deal, Willing To Buy More EFSF Bonds (WSJ - Dow Jones)
Greece private creditors take 21 percent loss in rescue (Reuters)
Draft Sarkozy-Merkel Deal Extends EFSF Tasks But Forgets To Finance It -Nomura (Forbes)
Europe agrees sweeping new action on debt crisis (Reuters)
Greece to default as eurozone agrees €159bn bailout (The Telegraph)
The CDO At The Heart Of The Eurozone Just Became Europe's Plunge Protection Team (Zero Hedge)
IMF Lagarde: More-Flexible Bailout Fund To Calm Markets (DJ - NASDAQ)