German Finance Minister Wolfgang Schaeuble endorsed a fundamental claim and at the same time dismissed a primary goal of the Greek government, during a Bundesbank conference in Frankfurt on Thursday.
Schaeuble accepted that the International Monetary Fund (IMF) is probably right in arguing that the Greek debt is unsustainable but noted that a haircut will not happen.
“There cannot be a haircut because it would infringe upon the system of the European Union,” he said and added that a form of debt relief, such as reprofiling, which defers from restructuring as it does not involve a reduction of the debt value but a change in other parameters like the maturity date, will be discussed in the next few days. However, he noted it is unlikely that this would actually be implemented.
Earlier in the day, German Chancellor Angela Merkel had also rejected the possibility of debt haircut.
Schaeuble instead said that Greece’s creditors need signs of credibility to be convinced and give more money to the crisis-stricken country.
“We have always said there need to be prior actions, actions meant to build trust, and I don’t see any prior actions,” the German Minister said.
Schaeuble revealed that he told U.S. Treasury Secretary Jack Lew, who also argued that the Greek debt is unsustainable, that he is willing to make Puerto Rico, whose debt has reached 72 billion dollars, a Eurozone member if the USA include Greece in the dollar.
Schaeuble also rejected parallelisms between the write-off of Germany’s debt in 1953 with Greece’s debt, as the two situations are not comparable.
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