GERMANY: President of the European Central Bank, Jean-Claude Trichet says that Greece must avoid any form of...
- Title: GERMANY: President of the European Central Bank, Jean-Claude Trichet says that Greece must avoid any form of restructuring in tackling its debt crisis and hinted towards an interest rate hike in July
- Date: 10th June 2011
- Summary: FRANKFURT, GERMANY (JUNE 9, 2011) (REUTERS) EXTERIOR OF FRANKFURT STOCK EXCHANGE VARIOUS OF TRADERS BOARD WITH GRAPH SHOWING DAX CURVE VARIOUS OF TRADERS BOARD SHOWING INDICES VARIOUS OF TRADERS (SOUNDBITE) (English) ROBERT HALVER OF BAADER BANK AG, SAYING: "We will have in July the next interest rate hike by the ECB but the ECB is well aware it cannot hike interest rates the way it should to compete against the price pressures and we all know that the southern boards of the euro zone, Spain, Italy and Portugal and Greece, they need still a low interest rate environment otherwise they will have big economic problems." TRADER BOARD SHOWING LOWEST VALUE OF THE DAX ON THE DAY TRADER VARIOUS OF TRADING FLOOR
- Reuters ID: LVA1OMMYJL02F1Z7CPQ7JP9WI5LB
- Location: Germany, Germany
- Country: Germany
- Duration: 00:01:40
- Topics: International Relations,Finance
- Story Text: Greece must avoid any form of restructuring in tackling its debt crisis, ECB President Jean-Claude Trichet said on Thursday (June 9).
"We are not in favour of restructuring ... and so forth. We exclude all concepts which would not be purely ... without any elements of compulsion," Trichet told a news conference. "We call for avoiding any credit event and selective default, say. And of course, default."
Trichet was questioned repeatedly on the Greek crisis during a news conference to discuss the ECB's decision on Thursday to keep interest rates at 1.25 percent.
He also signalled the ECB stood ready to raise rates again next month, despite the crisis engulfing the euro zone's weaker economies.
The ECB is caught up in high-stakes manoeuvring between financial markets, euro zone governments and the International Monetary Fund over who pays to avoid Greece becoming the euro zone's first state insolvency.
Greek government bond yields rose sharply on Wednesday (June 8) after German Finance Minister Wolfgang Schaeuble called for a "substantial contribution" to support Greece from private holders of its debt and suggested extending the maturities of outstanding Greek debt by seven years.
Trichet's comments on Thursday appear to underline his opposition to such pressure.
One idea mooted by EU officials is to get banks to agree voluntarily to buy new Greek debt when the bonds they currently hold mature.
He also indicated the ECB might not be willing to accept Greek bonds as collateral from banks seeking loans if some form of restructuring made the bonds ineligible under ECB rules.
Germany's DAX index was up 1.4 per cent at 7158 at 1425GMT, but traders said they were sceptical about a possible increase in rates next month, saying that it would not benefit those countries in the euro zone who are struggling to get their finances under control.
"We will have in July the next interest rate hike by the ECB but the ECB is well aware it cannot hike interest rates the way it should to compete against the price pressures and we all know that the southern boards of the euro zone, Spain, Italy and Portugal and Greece, they need still a low interest rate environment otherwise they will have big economic problems," said Robert Halver from Baader Bank AG.
Trichet also said that the Governing Council sees Bank of Italy head Mario Draghi as a good candidate for the ECB presidency.
"The Governing Council had no objections to the proposed candidate, Mario Draghi, who is a person of recognised standing and professional experience in monetary or banking matters," the ECB said in a statement.
Draghi is the only declared candidate to follow Trichet in the position after his termin October
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