Europe Pledges $40 Billion to Greece

Greece received an offer on Sunday of up to 30 billion euro ($40 billion) in aid to combat its massive debt obligations in a long-awaited move from the leaders of the euro zone.

According to the plan from the European Union, Greece will receive loans at an interest rate of around 5 percent, which is far lower than the 7.5 percent rate that the markets were demanding last week to offer aid to the Greek government. The rate is still not as low as Greece had been seeking.

The European Union has come to the rescue of Greece to ease the fears of the euro being hit hard if other suffering countries like Spain, Portugal and Italy fall deeper into debt as well.

The details provided by the 16-nation group will hopefully bring some light to the vague confirmations of emergency funds that are available for Greece. Investors had been demanding higher rates on loans to Greece amid the absence of certainty from the European leaders.

The International Monetary fund could offer up to $20 billion in additional funds, likely at an even lower interest rate if the need arises in Greece.

The potential rescue of Greece would mark the first time in the history of the euro zone that a bailout was necessary, but the reassurance from the European leaders could help to ease the minds of investors that Greece does have support.

Greece has yet to make a formal request for funds from the euro zone, but the plan will make the funds available to Athens if it asks for them. If Greece does ask, the heads of the European Union governments would have to sign off on the package.

"The Greek government has not asked for the activation of this mechanism despite the fact that it is immediately available," Greek finance minister, George Papaconstantinou said.

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