The European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, a European official said.
The commission, the European Union’s executive body, opposes ideas that are being floated by some government officials to get banks to accept bigger so-called haircuts and doesn’t want to have talks about any such attempt, the official said on condition of anonymity because the deliberations are private. Germany and the Netherlands are leading a drive by as many as seven euro-area countries for more private-sector involvement in the second Greek package, the Financial Times reported today.
The German Finance Ministry said that it wasn’t “putting pressure on anybody” over haircuts after Chancellor Angela Merkel signaled in an interview with Greek television broadcast today that policy makers may review Greece’s second bailout depending on the results of an international progress report.
Experts from the EU commission, the European Central Bank and International Monetary Fund will return to Athens tomorrow as officials race to put in place a package of measures that will ring-fence Greece. Euro-area finance ministers will hold an extra meeting on Greece in October amid international concern that a default could plunge the global economy into recession.
“We must now await what the troika, that is the expert mission, finds out and tells us: do we need to renegotiate or don’t we need to renegotiate?” Merkel said in the interview with Greek NET television, according to a transcript.
‘Way Too Early’
The Financial Times Deutschland reported earlier today that euro members have started talks on renegotiating the second bailout. Banks and insurance companies might have to increase their contribution to the rescue package as Greece’s economy has deteriorated, the German newspaper said, citing unidentified people familiar with the situation.
“It’s way too early to talk about this,” German Finance Ministry spokesman Bertrand Benoit said by phone, denying that Germany is behind the efforts. “We want to take everything one step at a time and the priority now is the sixth tranche” of Greece’s current aid package.
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