Early last Thursday, European leaders came to an agreement to slash Greek debt by 50 percent.
The deal was made among 17 heads of state and government in the euro zone. The deal also includes adding $1.4 trillion to the European Financial Stability Facility, a commission made to combat debt crisis in the European Union.
Previously, banks had agreed to cut debt by 21 percent at a summit in July, but that number more than doubled.
In regards to the deal, President of France Nicolas Sarkozy said, “The results will be a source of huge relief to the world at large, which was waiting for a decision.”
Chancellor Angela Merkel of Germany believes the plan is a good step to recovery.
“I believe we were able to live up to expectations, that we did the right thing for the euro zone, and this brings us one step farther along the road to a good and sensible solution,” Merkel said.
Under the deal, Greece’s debt will be 120 percent of its yearly economic output, down from 160 percent today, the German paper Spiegal reports. Many bank stocks in the U.S boosted afterwards, including gains for JPMorgan Chase, Goldman Sachs, and Bank of America.
Sophomore economics major David Palensky says that the deal represents an increased confidence in the ability of Greece to recover, saying that a big part of economics is “future expectations.”