LUXEMBOURG (MNI) – The situation with Greece is a crisis requiring
great verbal discipline, European Central Bank Governing Council member
Yves Mersch said Wednesday.

Mersch, speaking at a press conference to present the latest
Financial Stability Review of the Luxembourg Central Bank, which he
heads, said it would be “totally counterproductive” for him to comment
at length on Greece.

“We are in a crisis situation, we have proposals how to handle the
crisis, and — as I said — the utmost discipline is now necessary…
because the worst has been in communication. And that’s why I will not
add” to the public discussion, he said.

“We will take up our responsibility within the central bank and
within the European Treaty,” he added.

“There have been so many contradictory statements,” Mersch
complained of the debate surrounding Greece.

Mersch declined to comment on whether the ECB should purchase Greek
government bonds or on a number of other questions pertaining to Greece.
When asked whether he sees other Eurozone states in a precarious fiscal
situation, he replied only that “I am very closely monitoring the
situation in my country” and that with respect to other countries, the
corresponding central bank head should be asked.

As to the threat of contagion, Mersch responded merely that “each
nation is different and you know that the present Treaty is based on the
principle of self-responsibility in order to take into account national
peculiarities.”

“We have to do our jobs in our countries and others have to do
their jobs in their countries in order to have economic fundamentals
that are sustainable and compatible” with monetary union, he added.

The expected reduced need for banks to provision for future
write-downs “is depending on a linear recovery,” he said, “and if there
were any additional shock…it could not be excluded” that write-downs
would increase as a result.

Greece, which Mersch stressed “is part of the European family,” has
taken measures that the Governing Council sees as “convincing and
encouraging.” He said he was “confident that the result of these
discussions” currently underway will lead to reforms “allowing Greece to
find in the medium term a sustained solid growth path.”

“I hope that all those who have a responsibility in this dossier
will be aware of their responsibility vis-a-vis” Europe and the monetary
union, he said.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

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