PARIS (MNI) – A failure by EU political leaders to quickly agree on
a new bailout package for Greece could provoke a currency crisis in the
Eurozone, European Central Bank Governing Council member Yves Mersch
said in an interview with Japan’s Nikkei news agency, published over the
weekend.

“Right now we are clearly in a debt crisis. But if we are incapable
of reacting to the crisis responsibly, this could undermine the euro,”
Mersch, who is the governor of the Luxembourg Central Bank, told Nikkei.
“The debt crisis can turn into a euro crisis,” he added.

Heads of state and government of the Eurozone countries are due to
meet Thursday in Brussels in an emergency summit to try and give some
impetus to a solution for the Greek crisis.

Mersch expressed concern about the leaders’ ability to take
convincing action. Markets are “very insecure,” he said, mostly because
of “hesitant decision-making on the level of finance ministers.” He
partly blamed that on calls for private-sector creditor involvement in a
new Greek rescue plan. This, Mersch said, “must not be a precondition
from the start.”

However, he noted that, “in some countries there are pressures from
populist movements.”

Mersch, echoing the words of ECB President Jean-Claude Trichet in
another weekend interview, reiterated that the central bank would not
accept Greek bonds as collateral if they were in default. He added that
if “the [budget cutting] program is implemented rigorously, Greece can
return to a sustainable growth path.”

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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