Barroso Unveils Plan to End Eurozone Debt Crisis

The president of the European Commission, Jose Manuel Barroso. Photo by EPA/BGNES

The president of the European Commission, Jose Manuel Barroso, has set out a plan designed to bring an end to the eurozone debt crisis, BBC reported.

In a speech, Barroso said banks must set aside more assets to help guard against future losses.

Banks supported by the eurozone bailout fund - the European Financial Stability Facility - should be stopped from paying dividends or bonuses, he said.

The commission called it a "comprehensive response" to the crisis.

It outlined five areas of action "designed to break the vicious circle between doubts over the sustainability of sovereign debt, the stability of the banking system and the European Union's growth prospects".

Barroso said the plan "charts Europe's way out of the economic crisis".

"Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient," he said.

The plan calls for five policy actions:

- Decisive action on Greece so that "all doubt is removed" about the country's economic sustainability. This includes freeing up the latest tranche of bailout funds

- Implementing measures agreed in July, which include increasing the size of the EFSF to 440bn euros (7bn; ?385bn) and accelerating the launch of its permanent successor, the European Stability Mechanism

- Co-ordinated action on strengthening Europe's banks. Banks should set aside more assets to cover losses through private funding or national governments if necessary. If this is still not adequate, they can tap into the EFSF, but if they do they will not be allowed to pay dividends of bonuses

- Speeding up policies to enhance growth and stability, such as free trade agreementsBuilding greater integration for economic governance across the eurozone.

Lawmakers in Slovakia rejected a plan late Tuesday to expand the powers of a bailout fund for banks and troubled European governments.

The development, which was tied to a vote of confidence in the government of Slovakian Prime Minister Iveta Radicova, is a bit of a setback for European leaders that are struggling to deal with the continent's growing debt crisis.

Slovakia is the only member of the 17 nation euro currency bloc that has not approved the plan to overhaul the bailout fund, known as the European Financial Stability Facility, or EFSF.

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