After months of lobbying, it was announced that the Eurozone had come to an agreement on a bailout plan for Greece. The agreement will also apply to any other financially troubled Eurozone members who might need help in the future.
Under the terms of the bailout, Eurozone members and IMF would provide funds for a bailout program only if Greece or the troubled Eurozone member cannot cannot raise funds from financial markets.
The bailout plan was a victory for German Chancellor Angela Merkel, who demanded that a rescue for Greece only come when the country runs out of other options and that any rescue must include the IMF.
The IMF option had been heavily opposed earlier by the French and the European Central Bank, who were afraid that turning to IMF would damage the Euro’s standing.
However, each bailout case would still require the unanimous agreement of the 16 eurozone countries to release the loan funds. This means that any country in the Eurozone can veto a bailout.
So essentially, the bailout plan is like this:
1) If you need money, you need to tap the financial markets first.
2) If you are unable to do so, the rest of us will come together to decide whether we want to lend you money (with additional funds from IMF). All of us must agree to the deal for the funds to be released.