BRUSSELS – In one whirlwind morning, the European Union nations agreed Thursday to two key measures vital to the financial security of the region. As well as laying the groundwork for a full-fledged banking union, Greece’s euro partners approved billions in bailout loans that will prevent the country from going bankrupt.
The measures, approved by European finance ministers, ended weeks of haggling over ways to deal with the three-year financial crisis. Their decisions freed up the 27 EU leaders gathering for their summit Thursday evening 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 €49.1 billion ($64 billion) between now and March, with €34.3 billion due in the coming days. Greece needs the money to stay afloat and avoid a calamitous 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 gathering of eurozone ministers came just hours after a pre-dawn meeting of finance ministers from all 27 EU countries, including non-euro countries such as Britain and Poland, agreed to create a single supervisor for the region’s banks.
It was a key component of what many hope will eventually become a full-fledged banking union — a single rulebook for all banks and co-ordinated plans for helping lenders in trouble. Crucially, the single supervisor paves the way for Europe’s bailout fund to give money directly to struggling banks, without dragging governments into the mess.
“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.
Providing it is approved by the European Parliament early next year, the European Central Bank will take on the single supervisory role. The ECB will have direct oversight for the largest and most significant banks in the eurozone and any other country in the EU that wants to opt in. It will also direct national authorities in supervising smaller lenders.
“The crisis came by way of the banks and now a tool is in place so that nothing will be like it was before,” declared Hollande on his way into Thursday’s summit.
EU heads of state and government later turned their attention to the next steps, including forging closer fiscal, economic and political ties that will help the region avoid future financial crises. They also discussed more aspects of the banking union — such as region-wide deposit guarantee systems.
German Chancellor Angela Merkel said the creation of the supervisor was “a big step toward more reliability and confidence in the eurozone.” After months of haggling, a compromise between France and Germany paved the way for the agreement on the supervisor.
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 per cent in the third quarter of 2012, compared with 17.7 per cent 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 €31.9 billion ($41.5 billion) of its bonds from private investors at a third of their face value.
“It is a big success for Greece; it’s a big success for Europe,” said Greek Prime Minister Antonis Samaras.
Sarah DiLorenzo in Brussels, Geir Moulson in Berlin and Elena Becatoros in Athens contributed to this story.