Eurozone Debt crisis solution reached

Eurozone Officials have finally agreed on the solution to the Debt crisis and how to resolve the three foundation problems that needed adressing urgently, to calm markets and restore confidence in the Eurozone's ability to heal itself.

With regards to Greece, the private sector, largely banks, will be required to accept a loss of 50% of the funds they have lent to Greece in the form of bonds. This will result in a reduction of Greek debt by Euro 100 billion and ease the pressures the Greek Government has been under and maybe even stop the demonstrations. Greece will also receive Euro 130 billion in fresh aid.

Banks themselves are required now to increase their capital base significantly from the current 6% of Tier 1 capital to 9% which will give them protection against events of this nature in the future, an attempt to avoid a contagion scenario through a large bank going bust through failure of these huge loans. This could result in less lending to the commercial sector.

The size of the European bailout fund has also been increased to one trillion Euros, huge firepower in reserve should it be required.

There will still be some work to be completed to make this happen but Euro leaders in announcments appear pleased with the solutions and the speed with which they came up with them. Whether the markets will be as satisfied remains to be seen but early signs are that European equity markets will open around 2% higher.