Eastern Europe Uses Greek Crisis as Cover to Delay Move to Euro Discipline

The euro-region debt crisis is giving Poland, the Czech Republic and Hungary an excuse to delay getting their economies in shape to join the single currency.

The European Union’s largest eastern members are slowing euro preparations as western governments struggle to end a debt crisis that nearly ripped the currency apart in May. Without a fixed timetable, buying the bonds of these countries is no longer a one-way bet on falling yields, said investors including Jean-Dominique Butikofer, who helps oversee about $1 billion of emerging-market debt at Union Bancaire Privee in Zurich.

Europe: Odds taken on death of the euro

Confidence in the single currency has been falling since the eurozone debt crisis swept through Greece and Ireland last year – but this has opened up some interesting areas for traders.

“The eurozone crisis has increased volatility in the region and has created significant trading opportunities,” says Paul Inkster, head of product at Barclays Stockbrokers. “The euro is always a popular currency trade and this crisis has only served to reinforce that trend.”

EU summit to take only minor steps on debt crisis

Euro zone leaders will take the next cautious steps in their year-long effort to quell the region's debt crisis at a summit on Friday, but the meeting is unlikely to produce a breakthrough.

The top item on the agenda for the 17 heads of state and government is to agree a "competitiveness pact," a deal Germany and France are pushing the rest of the euro zone to adopt to show their commitment to overhauling their economies.

Euro crisis set to return?

While investors are preoccupied with political turmoil in the Middle East and rising oil prices, an old problem festers.

If you were wondering what the next shoe to drop was, well here it is: The European Central Bank's "strong vigilance" against rising inflation will likely result in higher interest rates as soon as next month. I talked about that in my last blog post.

Misunderstanding the euro crisis

When France and Germany laid out a “pact for competitiveness” – visibly designed as a quid pro quo for German assent to more effective solutions to the eurozone debt crisis – they were seen as running roughshod over other nations and over the European Union’s spirit of community and solidarity. On Thursday came the response from the most ardent of European integrationists, in a Financial Times comment article by former Commission presidents Jacques Delors and Romano Prodi, and Belgian ex-prime minister Guy Verhofstadt. Both proposals champion the long-standing wishes of their authors. Neither remotely addresses Europe’s current challenges.