European leaders reach deal to help banks
German Chancellor Angela Merkel gestures as other European leaders pose during a family photo after a meeting of European Union leaders in Brussels on June 28, 2012.
Jeremy Hobson: Believe it or not, global markets are paying more attention to Brussels than to Washington this morning. There's a big EU summit going on there and it appears leaders have come up with an agreement that may help ease the debt crisis -- at least somewhat.
The BBC's political correspondent Robin Brant joins us from Brussels with the latest. Good morning.
Robin Brant: Hi Jeremy.
Hobson: Well, explain exactly what these leaders have agreed to when it comes to giving money to banks.
Brant: What they've agreed on, basically, is a deal to deal with the immediate crisis which is affecting banks in Italy and Spain. Those countries believe that they are having to borrow at a rate that could cripple their economies, frankly, and is therefore damaging to the survival of the eurozone itself. And so, what has been agreed is that in acronym land, as it is here, Italians and Spanish can have access to money in the ESM and the EFSF; that means that they will intervene, buy their bonds, hopefully push the cost of those bonds down, and so give some breathing space to those banks in Italy and Spain.
Hobson: What about the long-term situation? I mean the big solution that we've heard about for months and months now is that they've got to form a tighter union. Has any progress been made on that front?
Brant: Well yeah, I think there are two elements: there's a bigger bailout, effectively, for all the troubled banks -- and we're not there yet, this is far more limited. But also -- and Angela Merkel, the German chancellor has talked about this, this is a fundamental point for her and others -- they need to integrate further, move to a closer union in terms of banking; closer tax policy, because of course they share a currency. And ultimately, closer political union: a move towards a closer, federal state of Europe.
So it's important that those in the currency move towards that, because they want the euro to work. But that will be kind of ten years down the line.
Hobson: The BBC's Robin Brant, joining us from Brussels. Thank you so much.