European leaders meeting at the second emergency summit in Brussels this week announced an agreement to force banks to sharply increase their capital requirements so they can absorb expected losses on holdings of Greek debt. Leaders say it's an important first step in a larger plan to restore financial stability in the region. But while the broad outlines of a comprehensive debt relief plan are starting to emerge, the details remain sketchy.
Under intense pressure to reach an accord aimed at resolving the two year old debt crisis - European leaders agreed on a plan Wednesday to force banks to boost their capital ratios to make sure they can deal with future emergencies.
Lithuanian president Dalia Grybauskaite called it a major breakthrough for the 27 member countries of the European Union. But she says now the work begins.
"Of course the main thing now is restructuring all the banking sector, to stabilize and to give the guarantees that we are all behind it. So the Greek package will be renegotiated now and to go to the banking sector and representatives of banks. But we 27 give green light for negotiations to be finalized. And now it's all about technicalities," she said.
One of the technicalities involves the amount of Greek debt European banks are willing to write off.
European leaders want banks to take as much as a 60 percent loss, nearly three times the amount they agreed to in July.
Although England is not one of the 17 countries that use the euro, British Prime Minister David Cameron says the developments are crucial to the success of the entire continent.
"It's very much in Britain's interest that we sort out these problems and solve this crisis. We made good progress on the bank recapitalization. That wasn't watered down, it's now been agreed. It will only go ahead when the other parts of a full package go ahead and further progress on that needs to happen tonight (October 26, 2011)," he said.
German chancellor Angela Merkel, who won a mandate from German lawmakers to boost the size of the eurozone rescue fund, said it was crucial for the region to act as one.
"Germany can't do well if Europe doesn't. That's why the most important goal for the government must be that Europe emerges stronger from the crisis. This means Europe must become a Stability Union," she said.
Financial markets had anticipated more progress in Brussels this week.
Michael Hewson, a market analyst for CMC markets in London, said "We're not going to get a quick resolution, the market's going to have to suck it up."
While the immediate focus of the Brussels meetings have been on efforts by Greece to reduce its massive debt; Italy, Europe's third largest economy is also under pressure to adopt economic reforms to stave off the possibility that it could become the fourth eurozone country to need a bailout.