Eurozone finance chiefs agree on last resort bank recapitalizations by bailout fund ESM

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European finance ministers have agreed on broad guidelines on how to use the bloc's permanent bailout fund to rescue banks from failure, a long-promised goal to stabilize the bloc's financial system.

Enabling the 500 billion euro ($670 billion) rescue fund to shore up struggling banks directly is a pillar of Europe's so-called banking union, which seeks to hand European institutions the job of supervision and rescue rather than leaving weaker member states to fend for themselves.

Irish Finance Minister Michael Noohan said that the main guidelines of the framework document on how the rescue fund, the European Stability Mechanism, "will operate have been agreed tonight."

He insisted that it still will take a long time before the whole system will become operational.