European leaders agree to fund struggling banks

Brussels – Leaders of the European Union have reached an agreement to use its permanent rescue fund to directly boost struggling banks across the continent, and to seek a tighter long-term budgetary and political union.

The decision was reached early Friday morning after hours of discussions at the EU summit in Brussels. The agreement also establishes a joint banking supervisory body for the 17-nation bloc that uses the euro currency, and allows the rescue fund to buy the bonds of distressed sovereign borrowers. The last part was reached to satisfy the demands of Spain and Italy, who wanted help to ease their rising borrowing costs.

Spain and Italy put pressure on Germany to allow the bailout fund to buy government debt in the markets – a measure to contain borrowing costs.
 
Eurozone leaders agreed to begin implementing the decisions by 9 July. However, it could take until the end of the year before the new money becomes available.
 
German Chancellor Angela Merkel said after the meetings broke up soon before dawn that she was “very satisfied that we took good decisions on growth.”
 
The bank decision was aimed at helping Spain, which sought a