ECB re­jects soft re­struc­tur­ing op­tion

Kathimerini English - - Business & Finance -

The Euro­pean Cen­tral Bank’s chief econ­o­mist said yes­ter­day a Greek debt re­struc­tur­ing would be a “recipe for catas­tro­phe” as he blamed “vested in­ter­ests” in Bri­tain and the United States for fu­el­ing mar­ket pres­sure on the coun­try.

Juer­gen Stark told a con­fer­ence in Athens that the strug­gling eu­ro­zone coun­try’s “debt sus­tain­abil­ity is in­sured” if it fully com­plies with its in­ter­na­tion­ally mon­i­tored aus­ter­ity pro­gram.

Asked about the mar­kets’ hos­til­ity to Greek ef­forts, Stark said: “This is not the view of all mar­ket par­tic­i­pants, to be very clear. This is a dis­cus­sion trig­gered from Lon­don and New York. I don’t know what is be­hind it – vested in­ter­ests, peo­ple top­ping their books and so on. So it’s more com­pli­cated than just [say­ing] what mar­kets ex­pect.”

The Greek gov­ern­ment was told by the Euro­pean Union this week to take ur­gent mea­sures to keep its aus­ter­ity pro­gram on tar­get, as part of its com­mit­ments for the 110-bil­lion-euro pack­age of bailout loans it is re­ceiv­ing from EU coun­tries and the In­ter­na­tional Mon­e­tary Fund.

Stark’s com­ments un­der­lined the split among Euro­pean of­fi­cials over whether Greece should con­sider de­lay­ing re­pay­ment of its crush­ing debt load. Jean-Claude Juncker, head of the eu­ro­zone fi­nance min­is­ters’ group, held the door open on Tues­day to what he called a “re­pro­fil­ing” of Greek debt – a vol­un­tary ex­ten­sion of bond ma­tu­ri­ties.

An­other top Euro­pean Cen­tral Bank of­fi­cial re­jected any so-called soft re­struc­tur­ing of Greek debt, warn­ing it could do much dam­age. Lorenzo Bini Smaghi, an Ital­ian mem­ber of the ECB board, said at an event in Mi­lan: “I re­ject a soft re­struc­tur­ing op­tion for Greece. I don’t know what it means and we have to be very care­ful in giv­ing sig­nals to the fi­nan­cial mar­kets, as they can re­act.”

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