Brussels, 09/02/2012 (Agence Europe) - The president of the European Central Bank (ECB), Mario Draghi, announced on Thursday 9 February that he had received a phone call from the Greek prime minister, Lucas Papademos, telling him that the Greek government had reached agreement on the measures to be introduced as part of the second Greek bailout (in exchange for €130 billion or more in aid). Draghi refused to comment on whether the ECB, which owns some €40 billion-worth of Greek bonds, will agree to a write-down in its face value. He said that everyone talks about the ECB doing this and that, but the ECB itself has never commented and continues to refuse to comment. The ECB has no intention of violating the EU treaties that do not cover the creation of a lender of last resort.
Discussions have taken place about how the ECB could help relieve the burden of the Greek debt, for example by giving up any profits made when the bonds reach maturity (see EUROPE 10549). Draghi said such options amounted to legal tricks and strategems, and any idea of the ECB sharing in losses was unfounded. He said the most important thing was the political agreement in Greece that paved the way for the reforms needed in the country. All he would admit to was a mismatch between the money needed to make the Greek debt affordable (cutting the deficit from 160% of GDP to 120% by 2020) and the cash likely to be raised by a voluntary private sector write-down of Greek bonds.
Draghi called for a combination of structural measures and spending cuts, praising the budget discipline pledges by 25 EU member states, including all 17 eurozone nations, in the budget pact (see EUROPE 10542), which demonstrates that the euro is a hard fact. He added that the budget pact was a tentative first step towards budget union based not on cash flowing from rich to poor countries, but on the ability of each country to stand on its own two feet.
The ECB has decided to keep interest rates unchanged, but has tightened the rules on the type of collateral accepted in order to borrow from it. At the end of the month, it will be issuing a second batch of very low-rate three-year loans. At the end of December 2011, the first lending of this type helped ease the credit shortages in the European banking industry, although the ECB is still concerned about problems facing the real economy when it comes to getting loans from banks. (MB/transl.fl)