THEY barely dare say it, but the doctors are strangely confident: after a long illness, the euro may be recovering. This week’s all-night surgery by finance ministers to excise a festering lump of Greek debt went better than expected. “We have put in place almost all of the elements we need to make the crisis gradually go away,” says one. “We may be beyond the acute phase, and could be making the transition to normalisation.” It is the optimism of despair: the patient has not died, so must be improving.
Many are sceptical. But consider the evidence. Greece may now stabilise. It must meet conditions to get its money and will endure pain for years. But the risk of chaotic default and exit from the euro has receded. Private creditors have taken a big loss, yet the markets are muted. Elsewhere the signs are good. Italy is reforming, as is Spain. Most European Union countries have agreed to a new fiscal compact that will strengthen budget discipline. The European Central Bank (ECB) has averted a credit crunch by injecting liquidity into banks. And the defences against contagion may soon be boosted. On March 1st EU leaders will debate calls to enlarge their rescue fund by half. This could prompt others to pay more into the IMF, which would also help.