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BBC World Service

Initial reactions to the European debt deal

Steve Chiotakis Oct 27, 2011
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BBC World Service

Initial reactions to the European debt deal

Steve Chiotakis Oct 27, 2011
HTML EMBED:
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Steve Chiotakis: European leaders have agreed to measures that will ease the European debt crisis. For one, investors have voluntarily agreed to take a 50 percent loss on their investments in Greek debt.

Taking those losses will mean that European banks will also be required to raise more money to strengthen their balance sheets — and the eurozone’s main bailout fund will increase its capacity to $1.4 trillion.

The BBC’s Andrew Walker is with us now from Brussels with the latest. Hi Andrew.

Andrew Walker: Hello there.

Chiotakis: Will this be enough, do you think, to save the eurozone?

Walker: It will certainly make a big difference in the short-term, but there’s an awful lot of detail that need to be filled in — a lot of it highly technical. And I have to say, an awful lot of people think that even more firepower — more financial firepower — would have been a great deal more convincing.

Some people think that what it really needs is to get the European Central Bank explicitly involved as a lender to the bailout agency, which would then lend on to governments. But that is very unpopular in Germany, and so it’s not being agreed.

Chiotakis: What’s been the reaction — besides what you said about Germany — across Europe his morning?

Walker: Financial markets have certainly taken it very well; there’s been a marked rise in most share prices. I think across the European Union there’s a degree of relief that some deal has been done.

But I think inevitably people are going to start asking questions about what the detail really is, whether it is a durable solution to Europe’s problems or just a temporary stop-gap.

Chiotakis: The BBC’s Andrew Walker in Brussels, Andrew, thank you.

Walker: My pleasure.

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