QE a dis­tant hope for Greece

De­lays in re­view and le­gal con­cerns for ECB mean coun­try’s in­clu­sion in pro­gram un­likely for time be­ing

Kathimerini English - - Focus - BY YIANNIS PAPADOYIANNIS

Greece’s en­try into the Euro­pean Cen­tral Bank’s quan­ti­ta­tive eas­ing (QE) pro­gram keeps get­ting put off, just as crit­i­cism is mount­ing over the ef­fec­tive­ness of the bond-buy­ing pro­gram and the po­ten­tial le­gal haz­ards for Frankfurt – con­cerns that are do­ing noth­ing to make it eas­ier for the coun­try to get on board.

The con­stant de­lays in the com- ple­tion of the sec­ond bailout re­view, which should have been com­pleted by Fe­bru­ary 2016, are putting the cred­i­bil­ity of both Greece and the ECB in doubt, with some coun­tries ar­gu­ing that this ef­fec­tively rules Greece out for the pro­gram, which could even lead to the lift­ing of the waiver that al­lows Greek bonds to be ac­cepted as col­lat­eral for ECB liq­uid­ity to banks. That would be a very neg­a­tive devel­op­ment as it would gen­er­ate a new cy­cle of un­cer­tainty in Greece, along with more pres­sure on banks and the econ­omy.

Ac­cord­ing to the min­utes of a re­cent ECB Gov­ern­ing Coun­cil meet­ing in Frankfurt, con­cerns were ex­pressed about the pos­si­ble le­gal risks stem­ming from ex­ten­sive bond ac­qui­si­tions. This cre­ates wor­ries that ad­di­tional con­cerns may be raised about Greece by ECB mem­bers given the coun­try’s trou­bled his­tory and its lim­ited cred­i­bil­ity, thereby fur­ther de­lay­ing the buy­ing of Greek bonds even in the case that Athens ful­fills the nec­es­sary con­di­tions.

No­tably, even if the sec­ond bailout re­view were to be com­pleted im­me­di­ately – which is highly doubt­ful – the coun­try’s in­clu­sion in the QE pro­gram will not be au­to­matic, as the ECB does not con­sider the short­term mea­sures to ease Greece’s debts suf­fi­cient, and is ask­ing for ad­di­tional moves to be con­vinced about the sus­tain­abil­ity of the Greek debt.

How­ever, it is par­tic­u­larly un­likely 1.0679 that the medium-term mea­sures for re­duc­ing Greece’s debt will be ac­ti­vated any­time soon, as cer­tain coun­tries have ex­pressed strong op­po­si­tion. Athens is hop­ing that mea­sures will be pre­sented which will be ac­ti­vated at some point in the fu­ture, al­low­ing the ECB to give the green light for the ac­qui­si­tion of Greek bonds. There­fore the in­clu­sion of Greece in the QE pro­gram be­fore sum­mer ap­pears par­tic­u­larly dif­fi­cult.

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