European Central Bank (ECB) President Mario Draghi urged Greece to work quickly toward an agreement with its creditors to curb a deepening financial crisis and quash doubts over its membership in the eurozone.
Even as he cautioned investors against dumping the single currency, Draghi said Greek Prime Minister Alexis Tsipras’ government must do “much more work” to show it can satisfy the terms of its 240 billion euro (US$259.3 billion) bailout program.
“It is urgent,” Draghi told reporters in Washington on Saturday during IMF meetings. “We all want Greece to succeed. The answer is in the hands of the Greek government.”
Draghi made his call after Greek government bonds suffered their worst week since Tsipras’ election in January. The Greek government’s anti-austerity talk clashes with demands from Europe to take more steps to revamp its economy before receiving more aid.
At stake is Greece’s ability to avoid defaulting on its debts and stay in the 19-nation eurozone. The brinkmanship overshadowed the IMF talks, as delegates from outside of the eurozone urged a speedy resolution.
“We have been clear in our conversations with all parties [that] there is an urgent need to come together around a comprehensive approach,” US Secretary of the Treasury Jack Lew said on Friday.
Eurozone finance ministers are to discuss Greek progress on Friday in Riga, Latvia.
A deal is unlikely to be ready by then, Dutch Minister of Finance and Eurogroup President Jeroen Dijsselbloem told reporters in Washington on Friday.
For all the strains, Draghi cautioned investors not to bet against the 16-year-old single currency.
“It is pointless to go short on the euro,” he said. “Do it.”
He also said that Greek banks continue to meet the requirements for emergency liquidity assistance (ELA), a financial lifeline the ECB decides on each week.
“ELA will continue to be given to the banks if they are judged to be solvent and if they have adequate collateral, which is the case now,” Draghi said.
The aid will have to end eventually, ECB Governing Council member Christian Noyer said. He said it is consistent with ECB rules and not a substitute for long-term actions.
“Emergency assistance is by definition not meant to last indefinitely,” Noyer said. “There will have to be a solution to the fundamental problems. If deposits continue to drop, banks will find it difficult to get refinancing.”
In Washington, ECB Governing Council member Vitas Vasiliauskas said the central bank should not extend its aid beyond the summer.
“The situation in Greece means that we should have a limit until summer for ELA,” Vasiliauskas said on Saturday. “Everyone understands what ELA means; it is a temporary measure to give the banks liquidity.”
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