Eurozone leaders have yet to produce the 'fix' for the sovereign crisis. But if they can now deliver on their Euro Area Summit Statement, which affirmed the need to 'break the vicious circle between banks and sovereigns', last week's summit could be a watershed for the eurozone. To summarise briefly, it was agreed that:

• The European Commission presents proposals for the establishment of a single supervisory mechanism for the banks and that the proposals be considered as a matter of urgency by the end of 2012.

• When such a mechanism is established, involving the ECB, the banks in the eurozone could be recapitalised directly by the European Stability Mechanism (ESM).

• For the Spanish banks, financial assistance be provided first by the European Financial Stability Facility (EFSF) and then by the ESM when it becomes available but without the latter gaining seniority status (in the case of the Spanish banks).

• Support through the EFSF/ESM is to be available to help stabilise markets, notably bond markets, for countries complying with their budget rules and reforms.

David Fuller's view Note also the last sentence on performance, with which I agree.