MALAGA (MNI) – Rollovers of Greece’s sovereign debt by the
country’s private sector creditors should not lead to a default scenario
as long as they are purely voluntary and not centrally orchestrated,
European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo
said Friday.

Asked if private sector involvement in a new bailout package for
Greece would constitute a credit event, Gonzalez-Paramo replied: “I
think that if the participation of the private sector happens as it is
occurring, via informal contacts that are being made by some
governments, and in a voluntary, decentralized way, there would be no
objective reason in principle for a credit event.”

The rating agencies are not in uniform agreement about all aspects
of the matter, he noted. But what is “entirely voluntary and
decentralized should not, in and of itself, cause a credit event,” he
stressed.

The aspect of decentralization is important because it puts into
sharper relief the voluntary aspect of the PSI, he explained.
“Centralized initiatives could give the impression that there is an
element of compulsion, something which obviously is not the case.”

Asked whether the ECB would continue to accept Greek bonds as
collateral even if rating agencies saw a credit event in the PSI,
Gonzalez-Paramo replied, “the only thing I can say is that we can only
loan to entities that are solvent with collateral that is appropriate,
in accordance with our statues and internal norms.”

“We will see at that moment what the situation is,” he added.

Paramo confirmed that the Eurosystem is in “regular contact with
the rating agencies” because the ECB needs to understand how the
agencies arrive at their assessments.

A default by Greece “is not the central scenario,” he said. “If
Greece does what it has committed to…Greece will be on the way to
recuperating the solidity of its economy, to seeing again the growth
that it needs to confront not only its debt payments but to provide jobs
and well-being for its citizens. This is our central scenario and we
don’t have another one in mind.”

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