The euro zone needs more fiscal convergence to better deal with its growing debt crisis, Greek Prime Minister Lucas Papademos said on Friday, vowing to protect Athens' interests in complex debt swap talks.
A December 9 EU summit is seen by many investors as possibly the last chance to avert a breakdown of the single currency area, but German Chancellor Angela Merkel said on Friday that the "marathon" crisis will not be solved in one fell swoop.
"It is important that the spread of the crisis in the euro zone is dealt with effectively, with greater progress in fiscal convergence and bolstering of economic governance in Europe," Papademos told lawmakers.
The new prime minister said the ECB's intervention in bond markets had helped Greek banks and that the government was working to protect Greece's interests in ongoing debt swap talks aimed at cutting the country's debt mountain.
A representative of the bondholders said on Thursday that investors and the Greek government were making some progress in the debt restructuring talks but that the negotiations may continue into next year.
Papademos declined to speculate on what final deal would look like, saying that talks were complex and that there was no agreement yet on which law would govern the bonds.
"The creditors' request for the loan agreements to be governed by the Anglo-Saxon law has not been accepted," he said, adding that this was an important element in the negotiations. "Rest assured that the government's positions are aimed at securing Greece's interests in the best possible way."
Papademos also said that electricity would not be cut off to those who cannot afford to pay a controversial property tax that has been included in utility bills, but that the measure was necessary to help plug fiscal gaps and fight tax evasion.
"I do not think that it is right to cut electricity to those where it is clear that they cannot afford to pay the property tax," he said. "But this measure is necessary to move ahead with the fiscal consolidation."