ENGLISH

Central banker strongly opposes debt restructuring

Δημοσίευση 24 Ιανουαρίου 2011, 11:33 / Ανανεώθηκε 27 Ιουνίου 2013, 14:55
Central banker strongly opposes debt restructuring
Facebook Twitter Whatsapp

Stern warnings against the possibility of restructuring Greece's debt were voiced by Bank of Greece governor George Provopoulos during an interview published by the Athens-based Sunday newspaper "Ethnos tis Kyriakis".

Stern warnings against the possibility of restructuring Greece's debt were voiced by Bank of Greece governor George Provopoulos during an interview published by the Athens-based Sunday newspaper "Ethnos tis Kyriakis".

"Even simply discussing restructuring harms the country," he stressed and warned that such a move would trigger "uncontrolled chain reactions that would open a new, long-lasting cycle of mistrust in the future of the Greek economy".

According to Provopoulos, the political and economic cost would be much greater than the short-term cost of the fiscal adjustment that the country now had to make.

The central banker said that an extension of the repayment period of Greece's debt would be a positive development but not a cure-all, pointing out that no extension could "relieve us of the obligation to proceed absolutely steadfastly and at a fast pace down the road of fiscal and structural reform."

He also underlined that the discussion underway for a comprehensive European response to the crisis in the eurozone did not mean that Greece could relax its efforts but, on the contrary, that it needed to intensify them further.

The banker stressed that the goals laid out in the Memorandum for the EU-IMF loans were the "bare minimum" that Greece needed to achieve in order to tackle the crisis effectively, while straying from these goals would have "catastrophic consequences".

"On the other hand, the memorandum is not a overall policy framework. It merely makes provision for what is absolutely necessary. This is why I support the parallel existence of an equally binding, cohesive action plan for growth, basic aspects of which have been presented in detail in the last monetary policy report," he added.

Concerning the banking sector, Provopoulos predicted that Greek banks will face serious challenges after the crisis, in which mergers and strategic alliances could prove a useful tool. He also appeared sanguine that the 'correction' now seen in the Greek real estate market would not turn into the kind of "open crisis" seen elsewhere.