Reuters: US Dollar Report: HIGHLIGHTS-Comments from euro zone leaders' summit

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HIGHLIGHTS-Comments from euro zone leaders' summit Jun 29th 2012, 07:40 BRUSSELS, June 28 | Fri Jun 29, 2012 4:00am EDT BRUSSELS, June 28 (Reuters) - European Union leaders resume their summit on Friday just hours after euro zone members agreed to use the single currency's bailout funds to bring down borrowing costs for struggling countries. Italy and Spain had demanded emergency action for fear of being shut out of capital markets, and the summit was also to address long-term plans for closer fiscal and banking union. Following are comments by EU leaders before Friday's talks: GERMAN CHANCELLOR ANGELA MERKEL ON CONDITIONALITY FOR BOND-BUYING BY BAILOUT FUNDS: "We have taken important decisions last night. First we agreed that if countries need the instruments to buy bonds on the primary or secondary market from the EFSF or ESM then the conditionality will be agreed as follows: "The country report will be presented to the Commission on which basis we will agree a memorandum of understanding in which there will be a time-frame. The EU/IMF 'troika' will then supervise, as it is always usual in the EFSF and ESM, whether the conditions are met. "That would be the case if Spain or Italy, with regards to their interest burden, make use of such instruments. Then this conditionality would apply, which we have agreed on precisely, according to the rules we have." ON SPANISH SUPPORT: "Secondly, regarding the banking recapitalisation which Spain has requested, a request will be made with the EFSF. Once the ESM becomes available, then the application will be transferred to the ESM. The seniority of the bonds will not be changed. For Spain we won't do what is otherwise applicable in the ESM regarding the preferred creditor status because the request was made through the EFSF, where such details do not apply." LITHUANIAN PRESIDENT DALIA GRYBAUSKAITE ON IMPACT OF EURO ZONE DEAL ON SHORT-TERM BOND SUPPORT: "We are heading for a future where we will need very general supervisory bodies to look more carefully, more strictly, and (which are) more responsible for the financial sector and banking sector, and that's where we are heading. "I hope that in a very few weeks, the euro zone leaders will be able to find a concrete mechanism for how to control the not-very-well-behaving banks and to help them." Link this Share this Digg this Email Reprints

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