The Euro jumped higher on Monday following early morning news about a new bailout deal reached in Brussels at the end of an emergency EU Summit meeting that deals with Greece’s spiraling debt problems.
The euro has since come off its daily highs and is now trading lower against the U.S. dollar.
European Council President Donald Tusk tweeted at the conclusion of today’s emergency summit meeting:
EuroSummit has unanimously reached agreement. All ready to go for ESM programme for #Greece with serious reforms & financial support.
Tusk stated, “there are strict conditions attached to the bailout programme” and the agreement “gives Greece opportunity to get back on track”.
“The approval of several national parliaments, including the Greek parliament, is now needed for negotiations on an ESM programme to formally begin. Nevertheless, the decision gives Greece a chance to get back on track with the support of European partners” Tusk explained in a statement.
After marathon late night talks on Sunday that stretched into the early hours of Monday, the emergency EU Summit meeting produced new ultimatums for Greek Prime Minister Alexis Tsipras about the strict terms of a 3rd bailout deal that until now has proven to be elusive for Greece’s leftist government which showed reluctance to follow through with attached austerity conditions related to budget cuts and tax increases.
Tsipras finally agreed to go along with a key demand for IMF supervision and a German request that Greek assets under €50 billion will be placed in a trust fund in Luxembourg to be sold with the proceeds being used to pay down Greece’s debts.
Eurogroup President Jeroen Dijsselbloem said in today’s press conference that €50 billion of Greek assets will be transferred to a new fund that will be used to recapitalize Greece’s banks. The fund will be based in Athens and not Luxembourg, according to the U.K.’s Guardian.
Dijsselbloem also said that bridge financing will begin immediately to help cover debt repayments this summer.
European Commissioner President Jean-Claude Juncker said in the press conference that he’s “convinced” that the Greek parliament can approve all the measures agreed today.
German Chancellor Angela Merkel indicated that she can recommend “with full conviction” that the Bundestag should agree to open negotiations with Greece. But the Greek parliament must approve the entire conditions before the German parliament votes.
Merkel said that she thinks that trust can be regained between Berlin and Athens. She explained that a “nominal haircut” is out of the question but the eurogroup is ready to consider extending the maturity on Greek loans.
Greek Prime Minister Alexis Tsipras supported the bailout agreement but acknowledged that implementation will be difficult as he travels back to Athens to pass the reform bills by Wednesday before Greece’s parliament.
“We fought hard abroad, we must now fight at home against vested interests” Tsipras said.
“Deal is difficult but we avoided transfer of assets abroad, plan for liquidity asphyxiation. Won mid-term funding and debt relief” Tsipras said.