Greece Euro Exit Will Be Manageable: ECB Official
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A leading member of the European Central Bank has said a Greek exit from the common currency would eventually be manageable. However, the official cautioned that it is not the preferred outcome for the eurozone debt crisis as the process could be chaotic and extremely costly.
The comments by ECB executive board member Joerg Asmussen came at the start of a crucial week for Greece as it aims to persuade partners to release more bailout aid to keep the economy afloat.
A leading member of the European Central Bank has said a Greek exit from the common currency would eventually be manageable. However, the official cautioned that it is not the preferred outcome for the eurozone debt crisis as the process could be chaotic and extremely costly.
The comments by ECB executive board member Joerg Asmussen came at the start of a crucial week for Greece as it aims to persuade partners to release more bailout aid to keep the economy afloat.
Greek Prime Minister Antonio Samaras is due to hold talks with German Chancellor Angela Merkel on August 25 and a day later there will be another round of talks with French President Francois Hollande.
According to the AP, German officials and policymakers are “making clear they have no appetite for granting Greece more time to comply with the terms of its rescue package or other concessions.”
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In an interview with the Frankfurter Rundschau newspaper, Asmussen said his preference was for Greece to stay in the eurozone, as a breakup scenario would entail many hardships for all sides.
He added that a Greek exit would not be as orderly as many people imagine.
Asmussen said:
[quote] It would spark a slump in growth, job losses and would be very expensive. [/quote]
According to Asmussen, the surge in “Club Med” bond yields over recent months “reflects the fears about the reversibility of the euro, and thus a currency exchange risk.”
He said:
[quote] A currency can only be stable if its future existence is not in doubt. [/quote]
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Christine Lagarde, head of the International Monetary Fund, had issued a similar warning in May, cautioning that the consequences of Greece exiting the euro would be “extremely expensive and hard, and not just for Greece.”
Earlier this month, she urged international lenders, including the European Commission and the European Central Bank, to be patient with Greece as it takes time for economic reforms to produce results.
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