EUROZONE-GREECE/BUNDESBANK-TRUST ECB's Weidmann says Greece has lost a lot of trust

Record ID: 565899

  • Title: EUROZONE-GREECE/BUNDESBANK-TRUST ECB's Weidmann says Greece has lost a lot of trust
  • Date: 12th March 2015
  • Summary: FRANKFURT AM MAIN, GERMANY (MARCH 12, 2015) (REUTERS) BUNDESBANK PRESIDENT, JENS WEIDMANN WALKING INTO NEWS CONFERENCE ROOM WEIDMANN SEATING AT NEWS CONFERENCE TABLE CAMERAMAN WEIDMANN SMILING / PHOTOGRAPHER TAKING PHOTO NEWS CONFERENCE ATTENDEES MAN WRITING ON PAD WRITING ON PAMPHLET READING (German): "FINANCIAL STATEMENT 2014. PRESS CONFERENCE. FRANKFURT AM MAIN, 12 MARCH 2015." NEWS CONFERENCE IN PROGRESS (SOUNDBITE) (German) BUNDESBANK PRESIDENT, JENS WEIDMANN, SAYING: "For the extension of the existing programme, the Greek government had to oblige to a series of economic reforms which must be specified now, and then implemented. Only noticeable progress towards sound public finances, a competitive economic structure and a functioning political system can allow Greece to regain investor confidence and to be able to self-finance itself. Until then, the country will depend on further support, and I don't think that Greece can achieve an independent capital market by the middle of the year." CAMERAMAN NEWS CONFERENCE IN PROGRESS (SOUNDBITE) (German) BUNDESBANK PRESIDENT, JENS WEIDMANN, SAYING: "In this particular situation, governments and parliaments have to decide whether they are willing to continue to expand the Greek risk and the financial needs of the Greek state, despite the palpable uncertainty regarding the government's will for reforms. I see this mission less than ever in the euro system." MAN HOLDING PAGE FROM "FINANCIAL STATEMENT" PAMPHLET NEWS CONFERENCE IN PROGRESS (SOUNDBITE) (German) BUNDESBANK PRESIDENT, JENS WEIDMANN, SAYING: "First of all, it is of course the Greek government which must act. It must submit reliable and quantifiable commitments to reform the basis for the continued support through existing support mechanisms. And this is where a lot of trust has been squandered." PAGE FROM "FINANCIAL STATEMENT" PAMPHLET READING (German): "PROFIT AND RISK PREVENTION" MAN TAKING NOTES (SOUNDBITE) (German) BUNDESBANK PRESIDENT, JENS WEIDMANN, SAYING: "Only when the fiscal consolidation and the improvement of competitiveness consistently remains high on the political agenda, then we will also be set towards long-term success. The favourable financing conditions for state governments may not lead to the erroneous conclusion that further reforms are now redundant. This is not only true for the most crisis-affected countries, but also for the large countries of France and Italy. " NEWS CONFERENCE IN PROGRESS NEWS CONFERENCE CLOSING
  • Embargoed: 27th March 2015 12:00
  • Keywords:
  • Location: Germany
  • Country: Germany
  • Topics: General
  • Reuters ID: LVA4JJQPGOM6E4X0OJQX9YG5GLKJ
  • Story Text: Greece has lost a lot of trust and eurozone governments must decide whether to expand their risk exposure to Athens, European Central Bank policy maker Jens Weidmann said on Thursday (March 12).
    One option the Greek government has looked at to fund itself is for the ECB to raise a cap on Athens' issuance of Treasury bills, or short-term debt.
    But Weidmann, who is chief of Germany's Bundesbank, said the euro zone's central banks should ensure Greece's banks do not worsen their liquidity position by buying up Greek government debt for which he said there is still no market.
    He did not see Greece regaining access to capital markets by mid-year.
    "For the extension of the existing programme, the Greek government had to oblige to a series of economic reforms which must be specified now, and then implemented. Only noticeable progress towards sound public finances, a competitive economic structure and a functioning political system can allow Greece to regain investor confidence and to be able to self-finance itself. Until then, the country will depend on further support, and I don't think that Greece can achieve an independent capital market by the middle of the year," Weidmann told a news conference to present the Bundesbank's 2014 results.
    Weidmann put the onus squarely on governments to decide whether they wanted to cover Greece's funding needs, saying this was "less than ever" a task for the euro zone's central banks.
    "In this particular situation, governments and parliaments have to decide whether they are willing to continue to expand the Greek risk and the financial needs of the Greek state, despite the palpable uncertainty regarding the government's will for reforms. I see this mission less than ever in the euro system," Weidmann said, adding that the Greek government had lost trust from its supporters.
    "First of all, it is of course the Greek government which must act. It must submit reliable and quantifiable commitments to reform the basis for the continued support through existing support mechanisms. And this is where a lot of trust has been squandered," Weidmann added.
    Turning to budget deficits, the Bundesbank chief said that the current low-interest rates brought on by the ECB's purchasing of government bonds were exceptional, and warned they may be lulling politicians into complacency.
    "Only when the fiscal consolidation and the improvement of competitiveness consistently remains high on the political agenda, then we will also be set towards long-term success. The favourable financing conditions for state governments may not lead to the erroneous conclusion that further reforms are now redundant. This is not only true for the most crisis-affected countries, but also for the large countries of France and Italy," Weidmann said.
    The remarks follow a decision by European Union finance ministers this week to give France's government two more years to bring its deficit below the 3 percent of GDP level specified by European rules.
    The EU this week also elected not start disciplinary steps against Italy, even though its debt, the second highest in Europe, is rising instead of falling as required by the rules.
    The Bundesbank's 2014 profit fell to 2.95 billion euros ($3.13 billion), down from 4.59 billion a year earlier due to lower interest income. The full amount was transferred to the Finance Ministry in Berlin on Thursday.
    Cuts in ECB interest rates in June and September 2014 meant the Bundesbank saw its 2015 annual result declining. ($1 = 0.9431 euros)
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