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Rescuing Greece An Unlawful Measure?

September 16, 2010

By Paul Hastings Professional

This April, Greece adjusted the amount of its national deficit upwards for the third time within 12 months, which has lead to massive discrepancies in the capital market with respect to government bonds. Since a refinancing crisis of Greece was feared to have farreaching consequences for the entire Euro zone, it was decided to grant Greece bilateral loans of up to 80 billion Euros in the scope of a concerted action of the member states, the Commission, the European Central Bank and the International Monetary Fund. Out of this volume of loans, up to 22.4 billion Euros shall be contributed by the Federal Republic of Germany. In an emergency proceeding, the Bundestag (German parliament) and Bundesrat (representation of the federal states) approved of the Act on the Assumption of Guarantees to Maintain the Liquidity of the Hellenic Republic for the Sake of the Financial Stability Within the Monetary Union (Monetary Union Financial Stability Act) on 7 May 2010.