Euro-area governments stripped their permanent debt-crisis mechanism of preferred-creditor status for any loans to Greece, Ireland and Portugal to help the countries return to bond markets. They also expanded their current 440 billion-euro ($630 billion) fund.

The decision by finance ministers today marks a policy reversal from a March agreement to give the European Stability Mechanism preferred status covering aid for all euro-area countries. Such seniority would have given the ESM, due to be established in mid-2013, priority over private investors in any payout after a default.