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FT: ECB Talks Publicly of Possible Greek Exit

According to Financial Times, Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union, as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout.
The comments by members of the European Central Bank’s governing council show that the risk of Eurozone fragmentation is taken increasingly seriously. This marks a shift at the ECB, which has said European treaties do not allow for an exit and that a break-up would cause incalculable economic damage.
“I guess an amicable divorce, if that was ever needed, would be possible but I would still regret it,” said Luc Coene, Belgium’s central bank governor.
“Things can happen that are not imagined in the treaties,” Patrick Honohan, Irish central bank governor, told a conference in Estonia. “Technically [a Greek exit] can be managed … It is not necessarily fatal but it is not attractive.”
Along with policy makers across the Eurozone, the ECB has increased pressure on Greece to stick to its internationally agreed bailout program, and warned that reneging would lead to outside financial support being cut off.
“The consequences for Greece [of an exit] would be more serious than for the rest of the Eurozone,” Jens Weidmann, Bundesbank President and ECB council member, said over the weekend.
In December, Mario Draghi, ECB President, said a Eurozone exit would result in “a substantial breach of the existing treaty” with incalculable consequences for the bloc.

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