500 Billion for Stabilisation - ECOFIN

The Economic and Financial Affairs Council (ECOFIN) has decided on a stabilisation package with a total volume of up to 500 billion euros after a meeting which ended in the early morning hours.

"In the wake of the crisis in Greece, the situation in financial markets is fragile and there was a risk of contagion which we needed to address. We have therefore taken the final steps of the support package for Greece, the establishment of a European stabilisation mechanism and a strong commitment to accelerated fiscal consolidation," said ECOFIN in a statement.

Greece's bailout agreement for 110 million euros over three years was signed and the first payments will be made before May 19th.

In addition, Portugal and Spain will take 'significant additional consolidation measures in 2010 and 2011.' Spain and Portugal are having similar financial difficulties to Greece, with the threat of default on government debt looming.

The stabilisation mechanism will provide financial support for member states in difficulties caused by exceptional circumstances beyond their control.

"We are facing such exceptional circumstance today and the mechanism will stay in place as long as needed to safeguard financial stability," said ECOFIN.

At the same time, the EU will urgently start working on the necessary reforms to ensure fiscal sustainability in the euro area.

"We underlined the need to make rapid progress on financial market regulation and supervision, in particular with regard to derivative markets and the role of rating agencies," said ECOFIN.

Further measures include a stability fee and the possibility of a global transaction tax.