The European Central Bank (ECB) cannot take part in any debt cut for Greece, one of its executive board members, Benoit Coeure, said in a newspaper interview published yesterday.
“It is not up to the ECB to decide whether Greece needs debt relief,” since that was a political decision, Coeure told the business daily Handelsblatt.
“But it’s absolutely clear that we cannot agree to a debt relief that includes Greek bonds that are located at the ECB,” he said.
“That’s impossible for legal reasons,” he added.
During the debt crisis, the ECB bought up huge amounts of Greek debt and still has some of it on its books. Cutting that debt would be tantamount to so-called monetary financing — printing money to get a government out of debt — which is strictly forbidden under the ECB’s own statutes.
On Sunday, Greek voters handed a decisive victory to leftist party Syriza in elections, putting Greece on a collision course with the EU and international creditors. Syriza leader Alexis Tsipras wants to renegotiate the terms of Greece’s 240 billion euro (US$269 billion) bailout with the EU and the IMF.
Coeure also said European governments needed to implement reforms and consolidate their national budgets to create sustainable growth and jobs.
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