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After 3 Bumpy Years, Europe Turns Corner On Crisis

German Chancellor Angela Merkel has also helped ease financial tensions across Europe by speaking more forcefully about the need to hold the euro together.

Merkel's support is critical because Germany, the eurozone's largest economy, has the most at stake financially in any bailouts. Merkel has backed the ECB's bond-buying plan and has made conciliatory statements toward Greece.

That has paved the way for the so-called troika of international lenders â¿¿ the ECB, the European Union and the International Monetary Fund â¿¿ to allow Greece more time to meet deficit-reduction targets. The Greek Parliament took a big step Wednesday toward securing its next batch of rescue loans from the troika by approving a new round of tax hikes and spending cuts.

Another key breakthrough in the financial crisis came in late June, when leaders meeting in Brussels took new steps to steady banks and governments. They agreed to ease up somewhat on austerity demands; to use bailout funds to buy government bonds and help ailing banks; and to create a single supervisor for all of Europe's banks.

Some analysts worry that as the financial pressure eases Europe's leaders could lose their recent momentum.

A breakup of the euro "is still possible," says Marie Diron, senior economic adviser to Ernst & Young. "I don't think we have removed the risk altogether."

Europe's leaders have big challenges left.

The most pressing is saving Greece. If the country was forced into a default and began printing its own currency, investors would assume other countries might go next and begin pulling their money out of those countries too, or demand higher returns to keep it there. The coming months could severely test Germany's new willingness to help. Despite two bailouts totaling ⿬240 billion ($311.3 billion) since 2010, Greece needs an estimated ⿬30 billion more from the other eurozone countries as its economy shrinks.

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