ECB Says it is “By and Large Done” Saving Greece
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European Central Bank chief Mario Draghi yesterday said that the bank has exhausted all legal means when it comes to helping Greece and added that the onus of helping Greece, and the eurozone at large, is now “entirely in the hands of governments.”
Speaking at his monthly news conference, Draghi said the ECB is unlikely to assist Greece any further, putting the onus on eurozone governments to find the money needed to give Athens a little more breathing space.
European Central Bank chief Mario Draghi yesterday said that the bank has exhausted all legal means when it comes to helping Greece and added that the onus of helping Greece, and the eurozone at large, is now “entirely in the hands of governments.”
Speaking at his monthly news conference, Draghi said the ECB is unlikely to assist Greece any further, putting the onus on eurozone governments to find the money needed to give Athens a little more breathing space.
Draghi’s comments will no doubt increase the pressure on Athens who is awaiting a bailout extension from the troika. While no official decision has been made, Greece and its creditors will need to plug a 30 billion euros financing gap if Athens is to be given more time to meet its fiscal targets.
It has been proposed that the International Monetary Fund and the EU accept a “haircut” on its Greek debt holdings, but Draghi yesterday reiterated that the ECB cannot and will not accept a write-down on its estimated 40 billion euros ($51 billion) of Greek debt as that would amount to “monetary financing” – something that is strictly prohibited.
He said:
[quote] The ECB ensures price stability and pursues the restoration of monetary policy transmission channels but cannot do monetary financing. [/quote]
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European governments have thus far refused to take losses on their loans to Greece but the ECB had earlier this year agreed to forgo any profits on its Greek bonds, an amount that is expected to total 12 to 15 billion euros.
According to Draghi, one way to help Greece is to handover the proceeds to national central banks, but “it will be up to governments to decide whether they want to use these profits for Greece.”
One other option is to reduce the interest rate Athens pays on its loans, though officials say that would not bring significant relief.
On Wednesday, Greece approved another round of austerity measures, despite violent protests across the country.
Related News: Greece Passes $17.3 Billion Austerity Bill amid Violent Protests
Welcoming the move, Draghi said:
[quote] It is a very important step that the Greek government and the Greek citizens have undertaken. It really represents progress from what it was a few months ago. [/quote]
