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French President Nicolas Sarkozy came out to the press and announced the agreement. He declared that the leaders have agreed on a “European Monetary Union” – further fiscal integration in the euro-zone. He also rejected talks about a default. But with a big private sector contribution of up to 135 billion euros in 30 years, a credit event is imminent. Welcome to the Greek default.

EUR/USD jumped above 1.44 but returned to support, just above 1.4375, where it got stuck as the talks were delayed. Details are still emerging.

Most of the details suggested in the leaked draft were confirmed, including the mention of a Marshall Plan.

There are contradicting reports about the size private sector participation, but it is quite certain that a credit event will be triggered. It will be interesting to see if the Credit Default Swaps (CDS) are worth anything.

One report says 135 billion euros in 30 years. The immediate contribution is 37 billion in the upcoming 109 billion package for Greece.

Maturities will be extended up to 30 years, and perhaps to 40 years: there is a “ten years grace” period in addition to the 30 year extension. The wording is quite complex and still needs to be clarified.

While Sarkozy doesn’t use the word “default”, he talks about a situation were the European Union will need to guarantee Greek bonds if a credit event is declared by rating agencies.

The leaks about lower interest rates for Greece and longer maturities are confirmed by the French president.

Sarkozy says Greece is an isolated case and that this private sector contribution will not apply for Portugal and Ireland. I’m not sure the Irish like this.

The total package for Greece between 2011 and 2014 will be €109 billion, with a private sector contribution of  â‚¬37.

ECB President Jean-Claude Trichet is speaking now, and trying to explain the retreat of the ECB on a Greek default. He says that Greece is in an extraordinary situation.

Also the Greek Prime Minister  George Papandreou and EU President Herman Van Rumpoy spoke, but didn’t provide exciting headlines.

Trichet says that PSI must be voluntary and doesn’t commit on Greek collateral. He sounds firm and doesn’t “pre-judge on Greek debt”.

Question: Why can’t this happen in other countries? Answer: This will not happen in other countries, because it is written in the statement, and a point that is “most important” for the ECB.

Trichet says that no credit event will be triggered, according to “experts”. “It is not in the cards”.

We’ll see what rating agencies have to say about it. A credit event is likely to be declared by all three.

Trichet is angered by the members of the press.

The press conference has ended. EUR/USD finishes it a bit higher, at 1.4386, nothing to write home about.

So now, the European markets are closed. The agreement will be digested by everybody, especially rating agencies.

For more on EUR/USD, see the euro to dollar forecast.