Sean O'Grady: For long-term gain, the EU will have to share the pain

So: will it work? Short term, it offers reassurance on three fronts. First, that Greece will be able to fund itself for a while longer. Second, that Europe can actually agree on something, even if it is only when staring down the barrel of a shotgun. Third, it offers a sliver of hope that Italy and Spain, not formally on the table but haunting this summit all the same, may also receive sufficient pre-emptive aid to prevent them from melting down. Crucially, this renewed bailout fund, the European Financial Stability Facility (EFSF), will be able to buy Italian and Spanish bonds in the markets.

Now in due course, the tasks of stabilising those bonds may be beyond the EFSF's means and it may become overwhelmed yet again. But there we see just a little of the sort of forward thinking that has been so absent in this crisis, now approaching its second year.

Medium term, the big talk from Nicolas Sarkozy was again of European "economic governance". He said the new bailout fund will be almost like a "European Monetary Fund", a sort of mini-IMF, and if that is the case it would be a truly historic achievement. Yes, it could become an "EMF" but we must note it has no extra funds to do anything so far. It is also subject to national veto. Apparently, it ran out of support during the summit dinner. It will, I suspect, give the leaders indigestion later.

Long term? Well, as George Osborne put it the other day, Europe's taxpayers have to stand behind the euro. If Humberside is having a rough time of it economically, the rest of Britain doesn't turn round and say "you'll have to be kicked out of sterling". We stick together.

That is why the best thing that could happen to Europe is for its national debts to be "Europeanised". This is what "European economic governance" could lead to, unpopular as it is with the Germans, who are ultra-integrationist except when it comes to money. All those heavily devalued, unstable Greek, Italian, Irish, and Portuguese bonds should be replaced by one system of eurobonds, guaranteed by all the governments. Collectively, the eurozone's public finances aren't too bad. Investors would be happy to own them.