Europe’s response to its sovereign debt crisis over the past 18 months has been akin to that of an unruly orchestra, with various sections refusing to play to a common score. Yet this could be the week that the musicians finally began to play in harmony.
On Wednesday, the world’s central banks took co-ordinated action to avert a liquidity crunch for Eurozone banks by injecting cheap dollars into the financial system. The same day, Germany dropped objections to the idea of providing extra support to the International Monetary Fund, which could enable it to play a bigger role in stemming the crisis.
And on Thursday, Mario Draghi, European Central Bank president, signalled that he stood ready to take more aggressive action to save the euro. But he has set a prerequisite – and meeting it is not a given. Eurozone states must do their part by agreeing a new fiscal compact, setting once and for all common rules to restore market confidence in the stability and future of the currency area.