EU to Create Permanent Bail-Out Fund
EU leaders have agreed to create a permanent bail-out fund to help member states in times of crisis and laws, giving the EU the power to check on national budgets, BBC reported.
The decisions have been made because the eurozone had almost collapsed earlier this year due to the lack of such mechanism, EU officials said.
The new rules aim at forcing a country to set its expenses in order before its economic problems affect the eurozone.
"Today we took important decisions to strengthen the eurozone. We recommend a robust and credible permanent crisis-resolution mechanism to safeguard the financial stability of the eurozone as a whole," Herman Van Rompuy, President of the EU Council, said, as cited by BBC.
Under the new rules, EU officials will be able to impose severe fines on countries that borrow and spend too much.
The maximum debt level allowed under the EU's Stability and Growth Pact is 60% of the GDP.
The permanent fund will replace the temporary EUR 440 B one, created to bail out Greece earlier this year.