The Greek crisis has once again exposed the weakness of the euro. However, for the fragile unity to last, the member nations have to remain committed to fiscal discipline and austerity measures.

Following the Greek crisis, the major concern in the international financial markets was the fall of the common currencyeuro. The euro has been selling at an eight-and-a-half month low against the dollar. It has lost nearly 10% since the last quarter of 2009. It has also weakened against other currencies such as the yen.

The IMF, European Monetary Union, and European Central Bank (ECB) announced a major rescue plan in May 2010 to calm the financial markets, but there was not much change in the investor confidence in the euro. In euro terms, this rescue package is worth EUR750 bn. This is broken up into EUR440 bn in loan guarantee, EUR60 bn in emergency funding from the European Union, and EUR250 bn from the IMF. Most of this money will come from 16 nations of the eurozone. A new Special Purpose Vehicle (SPV) was announced for the distribution of the amount.

In order to sterilize the monetary impact of the bailout, the ECB will resort to quantitative easing. The euro has seen a steady fall from $1.50 in late 2009 to the current price of $1.2637. After the announcement of the plan, the euro increased and debt yields fell sharply, especially in Portugal, Ireland, Greece and Spain. The euro recovered to $1.31 on May 10 when the massive rescue plan was announced. However, a few days later, the initial enthusiasm dampened and a lot of questions were raised as to how the SPV would be run. Adding to the negative sentiment was the news that Germany saw very little growth in the last quarter of the financial year.

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