EU Summit

Not the full commital to the instiitutions that are required, but much more decisive than in the past.

Two key elements are the agreement to provide capital injections directly to banks. This will work to resolving ongoing problems facing Spain, Italy and Ireland. Also of note is the agreement to make the ECB the institutional baisis for a banking union and Europe’s banking system regulator by year end. This gives the ECB (Europe’s only true federalist¬†monetary and fiscal institution) an extra federal role to play.

Markets will be looking for details, so rapid follow through to overcome any legalistic hurdles (e.g. treaty changes, etc) will be required, but, as far as EU summits go, this seems to have been constructive and might pave the way for a muddle through approach, which, afterall is the European approach.

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