Wednesday night's deal by the EU leaders came about as a result of the increasing Government pressure on the banks to reduce the bill run up by the Greek government. The banks accepted a "voluntary haircut" of 50% on their holdings of Greek government debt.

The endgame for Greece's relationship with the economic and monetary union may still be some time off, but the contours of the final act of the drama are starting to emerge. It seems fairly likely that Greece eventually will be forced to leave EMU, but the timing is still far from clear. Three guiding precepts stand out.

The European debt crisis is a sign of a much bigger conflict within the European Union. It is a battle for what Europe is and what it should do. And, more importantly, where the power truly rests; Brussels or national governments.