Brussels - In what European Union president Herman Van Rompuy described as a "real breakthrough", leaders agreed a €120bn growth pact, short-term measures to help Spain and Italy and a longer-term roadmap to reshape the 17-nation eurozone.
Following is a list of the main points agreed:
- A package of measures worth some €120bn to stimulate growth in the European Union by harnessing unused funds from the EU budget, raising the capital of the European Investment Bank and funding "project bonds" for infrastructure programmes.
- The package also includes measures to boost employment, in particular for young people, as well as a proposal to increase labour mobility throughout Europe.
- Leaders committed to setting up a supervisory body for banks in the eurozone, involving the European Central Bank, "as a matter of urgency by the end of 2012."
- When such a body is established, leaders said that the €500bn ESM bailout fund that is due to come into force next month could directly recapitalise banks, under specific conditions.
- Leaders said that loans given by the ESM to Spain to recapitalise its banking sector would no longer have to be paid back before other loans in case of default, a very important factor for market participants.
- Leaders pledged to use their bailout pots "in a flexible and efficient manner in order to stabilise markets" for countries that are respecting deficit targets. This is a reference to buying bonds to drive down borrowing costs.
- The ECB has agreed to act as an agent to the bailout funds in conducting operations on the bond markets.
- Eurozone leaders agreed to "work towards a tighter economic and monetary union" via closer budgetary and financial cooperation in a bid to prevent such a crisis happening again.
- EU president Herman Van Rompuy said leaders agreed on four "building blocks" to achieve this closer union: financial framework, budgetary framework, economic policy framework and a strengthening of democratic accountability.
- Van Rompuy was tasked with presenting a further report in October giving more detail on the timelines for reforms, which could result in a banking union and, much further down the road, joint debt issuance.