Faced with the prospect of a Greek default, private banks have agreed to write down 50 percent of their Greek bond holdings, thereby lightening Greece's debt load by 100 billion Euros, according to French President Nicolas Sarkozy. Greece will also receive further emergency loans and the European Financial Stability Facility (EFSF) is to quadruple or quintuple.
Swedish Prime Minister Fredrik Reinfeldt had attended the first part of the meeting before the Eurozone countries hashed the rest of it out themselves. He welcomed the news, saying the meetings took some steps towards resolving the crisis, and that there's reason to be cautiously optimistic as a result. But he admits there is still a lot yet to be done.
One of the things Reinfeldt is referring to is the meetings' conclusion that above all, Italy, Spain and Greece are going to have to tighten their belts and reduce their expenses even more.
Swedish finance minister Anders Borg says that requirements for Handels bank and Swebank to raise their levels of capital should be able to be managed without these banks having to raise mortgage rates.
Borg says that in his estimation, there's still room for the banks to keep a grasp on their profits. He says they simply need to reduce the dividends they pay out and that this should not affect home loan rates.
Stockholm University professor of international economics, Harry Flam, also says that the amount of capital Swedish banks will have to raise should not be a problem for them.
He says the amount, US$ 1.8 billion, roughly equals the profits that two of the big banks would make in a fiscal quarter, and he says that is not a lot of money.
Chief economist at SEB, Robert Bergqvist, cautions: now that the rules of the game have been changed, it could make it difficult for countries like Portugal and Spain to borrow money, because investors will be uncertain over whether or not they'll get their money back. He says there are no fast solutions to the problem that Europe has.