EU leaders show progress to resolve Euro Zone Debt Crisis

Leaders of all the 27 member countries of European Union have shown significant progress to resolve the current euro zone debt crisis. They have agreed to recapitalize all the European banks to protect them from any liquidity crisis and increase the size of their rescue fund to stop any possibility of Bond market contagion if any one of the euro zone countries defaults in the near future.

The final decision was deferred because of some differences regarding the intensity of losses the private holders of Greek bonds should accept.  The Euro zone leaders have also kept the option open to ask support from China and Brazil to revive their struggling bond market.

During the summit, the euro zone leaders have asked Italy to finalize an economic reform plan within next one week to boost growth and raise its growth potential. Italian Prime Minister Silvio Berlusconi is also expected to call a cabinet meeting to discuss the same and finalize a plan.

The euro zone leaders have approved the second tranche of Greek bailout loan of 8 billion euro last week to help Greece avoid default. With this Greece will be able to avoid default for now and euro zone leaders will get some more time to finalize the euro zone rescue plan.