Euro Shows Little Change After the First Day of the EU Summit
The euro dipped a bit lower on Friday morning, trading at 1.3060 as the day began. The currency has held around $1.30, riding a wave of optimism after Moody's left Spain's credit rating unchanged and rumors of a credit line for Madrid surfaced.
Thursday was the first day of a two day summit for European Union leaders where the region's debt crisis is to be discussed. Most are expecting the meeting to leave the currency unchanged, as the summit's focus is on long term plans to restructure the region's banks.
On Friday morning, BBC reported that EU leaders had reached an agreement about appointing a single bank supervisor for all of the banks in the eurozone. The agreement, mainly a compromise between French and German leaders, calls for the European Central Bank to oversee all banks within the currency and allows the ECB to intervene in banking matters within any country at any time.
Under this new system, eurozone leaders hope to separate banking control from individual governments in order to prevent another financial crisis like the one they face currently.
While this banking structure has been in the works for some time, the main dispute was timing. Statements from the meeting late Thursday night claim the legal framework will be in place by January 2013, and the system up and running a bit later in the year. A quick implementation is important, because under the new structure, struggling countries like Spain will receive money from the rescue fund directly into their banks.
Thursday's talks also touched on Greek austerity measures and leaders commended the nation on its efforts to meet budget requirements and receive its next aid installment. The meeting did not bring about any further news of a Spanish bailout, to the disappointment of many who are hoping to see the ECB's bond buying plan in action.
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