
European Bailout Synopsis:
The European Union in cooperation with the International Monetary Fund announced a €750 billion ($955 billion) bailout plan to contain the sovereign debt crisis in Europe. This came on top of a €110 billion bailout package for Greece announced last week. The European Central Bank simultaneously unveiled a plan to purchase public and private debt to “ensure depth and liquidity in those market segments which are dysfunctional.” If necessary, the US Federal Reserve has promised additional support in the form of US dollar swap lines to reduce strains in short-term dollar funding markets globally.
The Breakdown:
I. €60 billion from an EU emergency fund –the European Stabilization Mechanism– funded by all 27 European Union members.
II. €440 billion of loans and guarantees from the 16 members of the Euro Zone who share the common currency.
III. €250 billion from the International Monetary Fund (IMF).
IV. Purchasing of public and private debt by European Central Bank (ECB) –no amount specified.
V. US Federal Reserve reopening US dollar swap lines with foreign central banks –no amount specified, but original swap lines were nearly $600 billion US dollars.

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