EU Finance Ministers Debate Financial Crisis

Posted October 22nd, 2011 at 5:25 pm (UTC-5)
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VIDEO: ReutersUS 3 – 10/22/2011 3:19:00 PM – BC-EUROPE-OCT22-BELGIUM-

European Union finance ministers meeting in Brussels Saturday say they have made progress in outlining a plan to stabilize banks and increase the eurozone's bailout fund.

After hours of debate the ministers agreed on the need to inject about $140 billion into European banks to protect them against losses in case of a Greek debt default.

German Chancellor Angela Merkel and French President Nicolas Sarkozy told reporters Saturday that “progress has been made” during the talks and expressed optimism that a solution will be finalized by the summit Wednesday.

The two leaders are meeting Saturday in Brussels to iron out their differences ahead of the meeting with other eurozone leaders Sunday.

The 17 nations using the common euro currency approved a $596 billion bailout fund, but have yet to hammer out details on how to set it up.

France is seeking to turn it into a bank that would have access to large sums of credit from the European Central bank. Germany contends it would diminish the bank's impartiality. Berlin also wants private banks to assume bigger losses on their Greek debt.

International lenders warned Friday that private banks lending money to Greece may have to forgive more than half of what the debt ridden country owes.

The latest review by European Union and International Monetary Fund experts showed that a Greek bond writedown of 50 to 60 percent could still leave the country's debt burden bigger than its yearly economic output by 2020.