The euro’s plunge was halted after German Chancellor Angela Merkel’s comments that a meeting will be held on Wednesday before the G20 Summit begins in order to talk with Greek officials as well as EU and IMF officials to push Greece to implement last week’s EU summit decisions.
Also Merkel, who had agreed with French President Sarkozy in a phone call today, said that the EU is committed to implementing the three-fold plan to contain the debt crisis by calling for a Greek debt haircut, the recapitalization of euro zone banks and boosting the region’s rescue fund by leveraging it up to as much as 1 trillion euros.
Merkel’s spokesman Steffen Seibert said the German chancellor and French president “agreed, together with their European partners, to guarantee the full and swift implementation of the summit decisions, which are today more necessary than ever”.
“Germany and France are convinced that this agreement will enable Greece to return to sustainable growth,” Seibert said in a statement, adding that they had agreed to hold a round of consultations with European institutions and the International Monetary Fund, as well as a meeting with the Greek government, in Cannes on Wednesday.
With Europe’s two largest economies, Franc and Germany being committed to implementing the EU Summit debt deal, this eased some investor concerns and the euro reversed its fall against the US dollar and sterling by 13:00GMT.
Earlier in the day the euro plummeted on fears that Greece is trying to wiggle its way out of the EU Summit debt deal after unilaterally announcing holding a referendum on the debt deal.
However banks have reaffirmed their backing for the EU debt deal and today the Institute of International Finance (IIF) affirmed its commitment to the October 27 agreement with European authorities on a 50 percent writedown on Greek government bonds..
“We will work closely with the Greek authorities, euro- area officials and other relevant parties to agree on, finalize and move toward implementation of the details of the voluntary private-sector involvement in support of Greece’s reform effort to recover from the current crisis, restore market access and lay the basis for renewed growth,” the IIF said in an e-mailed statement today.