VIENNA (MNI) – The tension between Greece and its private sector
creditors over a debt reduction deal that would reduce the nominal value
of privately-held Greek bonds by 50% is “indeed a very difficult
situation,” but one that can be solved “with a cool head,” European
Central Bank Governing Council member Ewald Nowotny said here Tuesday.
Talks between the private creditors and Greek government officials
appeared to break down Friday over a disagreement on the level of
interest rates to be paid on new bonds that would be issued to replace
retired ones.
“I hope that all participants know the responsibility they have,”
Nowotny added. “The most important thing is to give Greece the time to
see the results” of the policy changes it has been making, he said.
Nowotny said it was not for the central bank to fix the situation
in Greece. “This is basically not a problem of the ECB but a problem
that has to be solved by the Greek government and the governments of
Europe,” he said.
He added that “the ECB can be helpful,” by providing liquidity, for
example. However, “the object of the ECB is always vis-a-vis the whole
of the Eurozone and not a specific country,” he said.
Nowotny noted that “on the positive side, we do now have a
government in Greece which has the intention to change things and we
should not ignore the huge changes that have been made.”
But he added “it is not astonishing” that Greece is having
problems, since it was already an “obvious outlier” before the crisis,
in fiscal terms.
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