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3/13/11

Europe pact's key points

European finance ministers are meeting here Monday and Tuesday to discuss the fine print of a deal covering the euro zone's bailout funds after euro-zone leaders vaulted over low expectations for an agreement that they hammered out in the early hours of Saturday morning.

Most of what was agreed Saturday morning—after a particularly rancorous discussion—had been resolved by finance ministers earlier in the year. That included a commitment to enhance the European Financial Stability Facility, the euro zone's current bailout fund, so that it can actually lend the €440 billion ($611 billion) originally promised and a commitment to establish a new €500 billion fund to replace the EFSF, which expires in 2013.

But two fresh details were particularly noteworthy. First, the leaders agreed that the bailout funds could buy bonds directly from governments, in the so-called primary market. Equally telling, they rejected the option of buying bonds from investors who currently hold them—that is, in the secondary market. That was a rebuff to Jean-Claude Trichet, president of the European Central Bank, which holds €77 billion of subprime government bonds on its own books and wanted to offload them.

For more; Europe pact's key points - WSJ.com

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