Eurozone officials have agreed on the new structure of the financial bailout fund to protect the area from its worsening debt crisis.
This week, fears were raised that Portugal could have to seek financial support from the international community after it failed to pass new austerity measures and its prime minister, José Sócrates, resigned.
At a meeting of the European Council yesterday, heads of state decided to replace the temporary European Financial Stability Facility with the European Stability Mechanism, subject to national approval.
The summit also established the operational details of the ESM, confirming that it will have £436.8 billion at its disposal and hold a AAA rating. The EFSF, meanwhile, will be granted an effective lending capacity of £387 billion to be in place by June.
In addition, delegates resolved to adopt the Euro Plus Pact, which will allow members to undertake economic cooperation beyond their existing commitments and arrangements.
It will also be open to non-eurozone countries and will see Denmark, Poland, Latvia, Lithuania, Bulgaria and Romania join.
Herman Van Rompuy, the president of the EC, says previous meetings of eurozone leaders, especially the informal gathering on March 11, helped to lay down much of the groundwork for the new measures.
“Today almost all the strands of this enterprise have come together,” he says.