Euro can survive Greek default -- Bundesbank boss
Published 13/06/2011 | 05:00
German central Bank president Jens Weidmann raised the pressure on governments to agree to a Greek bailout without the ECB taking part in easing the country's debt burden, saying the euro can withstand a default.
The Bundesbank president said the ECB was unwilling to turn its emergency bond-buying programme into a "lasting institution" and that Greece's implementation of austerity measures and asset sales was crucial to securing the handout to prevent a default.
Speaking in an interview with German newspaper 'Welt am Sonntag', he said: "If the commitments are not met, that cancels the basis for further funds from the aid package."
Mr Weidmann's depiction of a default as a liveable outcome contrasts with warnings from fellow ECB officials Lorenzo Bini Smaghi and Christian Noyer, as well as EU Union Economic and Monetary Affairs Commissioner Olli Rehn, who described it as a "Lehman Brothers catastrophe" last week.
European officials are racing to stem Greece's debt crisis by June 24 while sharing the cost of a new rescue with bondholders.
The IMF has threatened to withhold its share of what remains of Greece's original e110bn bailout until governments guarantee that the country's financing needs for the next 12 months are covered.
"We cannot accept an uncontrolled bankruptcy of a country," German Chancellor Angela Merkel said yesterday in her weekly video message.
European governments and the IMF would lend as much as an extra €45bn to Greece under a new bailout plan, two people with direct knowledge of the talks said last week. (Bloomberg)