The deal reached at the emergency European summit meeting in Brussels last Friday was supposed to cement a consensus for better fiscal discipline and reassure the financial markets about the European Union's resolve. By Wednesday, it was clearly not convincing investors.
The market bid the value of the euro down below $1.3 for the first time since January, and pushed the interest rates the Italian government must pay on new bond issues up again, apparently unconvinced that a little more austerity and a little more bailout money would save the euro.
The European Central Bank continued to face pressure to step up its purchases of euro zone government bonds. But the head of Germany's central bank, the Bundesbank, Jens Weidmann, said the country opposed using the ECB too rashly to back up governments that need to reform themselves first. He said the Bundesbank would provide new money as a loan to the IMF only if countries outside Europe did so as well. Weidmann called the Brussels deal "encouraging," but insisted that the idea of "creating the necessary money through the printing presses" be abandoned.
Meanwhile, at least four more EU members — none of them using the euro — have expressed reservations about the agreement, which only Britain definitively opposed at the summit meeting.