EU leaders hurt confidence with vague Greek pledge

EU leaders hurt confidence with vague Greek pledge | Reuters

PARIS (Reuters) - A vague pledge by European leaders to support crisis-hit Greece has probably reduced, not increased, investors' confidence in the euro zone.

By declaring they would "take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole," the leaders signalled they would prevent any debt default by Greece or other southern states.

But the statement did little to convince investors that the European Union could fix the flaw in the way it operates that led to the Greek crisis: its inability to enforce fiscal discipline among its members.

As long as this flaw remains, investors may fear the euro zone's rich states, such as Germany and France, will end up on the hook to support countries like Greece financially. Such aid could keep the zone together, but at the price of weakening it. [...]

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