June 17, 2011
Chancellor Angela Merkel of Germany has sued for peace with the European Central Bank (ECB), following weeks of feuding over how to rescue Greece from the devastating debt crisis threatening the future of the euro single currency.
Merkel announced on Friday that the decisions on a new three-year bailout package for Greece, tipped to run to €120bn (£106bn), would need to be agreed with the ECB.
At a Berlin summit with the French president, Nicolas Sarkozy, Merkel softened her terms for the Greek bailout, urged a quick decision, stressed that any participation by private creditors in the rescue should be voluntary, and insisted that a new package with Greece would be agreed together with the ECB.
Her climbdown was welcomed by the financial markets, as the prospect of Greece suffering a catastrophic disorderly default receded. The euro rallied strongly, gaining more than one cent against the dollar. Europe's major stock markets also closed higher as traders took a more positive view of the Greek situation.
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