European Union leaders announced Thursday an agreement over debt crisis measures, including convincing private sector investors to take a 50% loss on Greek bonds. World markets surged in response to the news. The agreement aims to solve three problems, the debt crisis in Greece, instability in the banking sector and adequacy of the bailout fund. The agreement with bondholders to voluntarily write down the value of Greek bonds by 50% translates to 100 billion euros, and reduces Greek debt load from 150% of economic output to 120%.
European Union leaders also agreed on ways to increase the EU bailout fund, which will boost its resources to about 1 trillion euros. The bailout fund will ensure larger countries like Italy and Spain do not get dragged into the economic crisis.
