Huge rescue package stabilizes euro

Analysts said the mechanism in place for eurozone member states could ward off contagion of the Greek crisis and stabilize the euro in the short run, but long-term challenges remain to be addressed by the 16-member bloc that shares the single currency.

After more than 10 hours of discussion, EU finance ministers finalized the details of the European stabilization mechanism agreed by leaders of the eurozone at a summit meeting held last Friday.

The European stabilization mechanism includes an aid facility to balance of payments to a value of 60 billion euros (about US$ 78 billion), with EU's own resources as guarantee, plus 440 billion (572 billions dollars) in funds or guarantees supplied by the eurozone member states, as well as a quantity from the International Monetary Fund (IMF) to the value of at least half of Europe's contribution.

After the huge rescue mechanism was announced to the surprise of the market, the euro struggled out of a 14-month low last week and rose to 1.30 dollars on Monday. And US and European stocks markets also rallied.

Analysts said that the huge amount of money under the mechanism provided a safety net for euro area members with public finance problems and allay fears of a spread of the Greek debt crisis at least in the short run. It also assured the market of EU's determination to ensure stability of the euro area; Kazinform cites China Daily. See www.chinadaily.com.cn for full version.