–ECB President Said Understands Aid Mechanism Won’t Be Used

BRUSSELS (MNI) – The European Central Bank is happy with a Eurozone
and International Monetary Fund aid deal for Greece but understands that
the mechanism won’t be needed or activated, ECB President Jean-Claude
Trichet said on Thursday.

Eurozone leaders agreed a deal Thursday to aid heavily-indebted
Greece with bilateral loans and IMF money, but only as a last resort.
Trichet had said earlier in the week that IMF involvement in such a deal
wasn’t appropriate and some of his ECB colleagues went further, saying
it could destabilize the Eurozone.

Late Thursday the ECB President denied that he had rowed back on
his opposition to IMF involvement in financial aid for Greece.

“I never said the IMF intervention would be this and that,” he

“It was a complex situation…I am extraordinarily happy that the
governments of the Eurozone found out a workable solution, and I
consider that the solution preserves what for us is decisive — the
responsibility of the governments of the euro area,” as defined in the
European Union budget rules, Trichet said.

European Union governments are required to adhere to strict rules
limiting their debt levels and budget deficits as a percentage of GDP.

“I wanted to preserve the responsibility of the governments of the
euro area, that is my compass,” Trichet told reporters in Brussels late
Thursday. “We have always defended the [EU budget rules, as set out in
the] Growth and Stability Pact.”

“My own understanding is that the courageous decisions taken by the
Greek government would normally not lead to the [aid] mechanism being
activated, because the market will ultimately recognise” Greece’s
actions, he said.

“We had a team of the ECB, of course the Commission, and the
experts of the IMF in Athens, in the period we were discussing their new
additional measures,” Trichet recalled, adding that the ECB considered
the new austerity measures taken by Greece to be “convincing and

The ECB President said his bank’s independence was “sacrosanct” and
wouldn’t be affected by any involvement of the International Monetary
Fund in an aid deal. The ECB, he said, has an “inflexible independence.”

“The ECB has always pressed…to preserve and to reinforce peer
surveillance inside the euro area,” Trichet said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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