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ECB to aid EU to tackle Greece problems

The European Central Bank and the European Commission will join forces to monitor Greece and to draw up “necessary additional measures” to maintain stability in the euro zone, the ECB said on Friday.

Greece has been pounded by financial markets after revealing its 2009 budget deficit was 12.7% of the gross domestic product, more than four times the EU ceiling of 3% and three times initial estimates.

“I confirm that the ECB will work with the European Commission in monitoring the implementation of the recommendations by Greece and will work with the European Commission on proposals for necessary additional measures,” ECB President Jean-Claude Trichet said in a statement.

“One can count on our permanent alertness in this respect,” he added.

Trichet also said euro-zone member states joint action to ensure financial stability was important.

“I appreciate the commitment of euro area member states to take determined and coordinated action, if needed, to safeguard financial stability in the euro area,” Trichet said.

European leaders on Thursday sought to prop up debt-laden Greece with words of support but offered no specific steps, sending Greek debt yields higher and the euro down against the dollar.

A deal to provide financial aid to Greece to stave off a broader crisis in the 16-nation bloc would be unprecedented.

But the rhetorical promises of support were not enough to satisfy financial markets, which are looking for specifics on how Athens may be helped out of its debt and deficit spiral.

In the statement, Trichet also said he saw the Greek commitment to reduce the deficit this year by 4 percentage points as important.

Greek Prime Minister George Papandreou said the deficit cuts would be delivered.

“We are willing to take all the reforms that are necessary to change the way the public sector is working in Greece,” he said on Thursday. “We have made very serious efforts to convince our partners that we mean business.” (Reuters)