FRANKFURT (MNI) – The Eurozone’s E30 billion rescue plan for Greece
is an important contribution to solving current problems, European
Central Bank Governing Council member Nout Wellink said in a newspaper
interview.

In an interview with German daily Boersen-Zeitung to be published
Thursday, Wellink conceded that the ECB’s collateral rule change was “of
course” related to concerns over Greek government bonds.

The rescue plan is “an important contribution to solving the
problem. The monetary union is not in danger,” Wellink told the
newspaper.

“The lesson, which we nevertheless have to learn, is that the
Stability and Growth Pact must be strengthened substantially. This also
pertains to its implementation,” Wellink said.

Asked whether the program — under which loans would be offered
below official market rates — might violate the Maastricht treaty’s
no-bailout clause, Wellink said that the lower interest rates are
primarily a consequence of the IMF’s participation in the program.

“If [the IMF] grants financial help in a bailout then it does so
under strict conditions but also cheaper than the market,” Wellink
explained.

He dismissed concerns that financial support might yet be blocked
by Germany’s constitutional court.

“As far as I remember, a suit in Karlsruhe [where the German
constitutional court is based] against the introduction of the euro was
also not successful,” Wellink said. “While I am generally aware of the
great significance of the highest court in Germany, this is currently
the least of my worries.”

Wellink also displayed confidence that any potential loans extended
to Greece would be paid back, pointing to the IMF’s track record.

The head of the Dutch National Bank expressed frustration over
disregard for the Stability and Growth Pact and called for more
vigilance ahead.

“It is absolutely frustrating to discover that Greece was able to
break the Maastricht budget rules for years…The government in Greece
has lived beyond its means for decades,” Wellink said.

A repeat of such developments must be avoided in the future, he
warned. In addition, authorities must ensure that “statistics must be
right. We had repeated problems with statistics submitted from Portugal
[and] Greece,” Wellink elaborated.

As a first Governing Council member, Wellink conceded that the
ECB’s recent decision to maintain BBB- as the minimum criterion for
central bank eligibility was indeed driven by concerns over Greek
government bonds.

“Of course this decision had to do with uncertainty over Greek
government bonds’ central bank eligibility in the coming years. With
this decision we have given the markets planning dependability,” Wellink
said.

The central bank also excluded government bonds from a new,
potentially stricter haircut regime, as it “did not want to bring about
a situation that creates new problems,” Wellink said.

In January, ECB President Jean-Claude Trichet had still asserted
that the central bank “will not change our collateral framework for the
sake of any particular country.”

Wellink argued the ECB’s help to Greece via the collateral
framework is congruent with the central bank’s mandate.

“The mandate to ensure a stable price level in the eurozone has top
priority. Next to that, however, ensuring stability of the financial
markets is also part of our mandate,” he said.

As long as the instruments aimed at stabilizing markets do not
conflict with ensuring price stability, there is no problem, Wellink
asserted.

“Loans from our side [the ECB] to a single county, however, are
excluded,” he added.

–Frankfurt Newsroom +49 69 72 01 42: email: jtreeck@marketnews.com–

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