- Title: Greece to ease capital controls soon, needs debt measures -Stournaras
- Date: 10th November 2016
- Summary: ATHENS, GREECE (NOVEMBER 8, 2016) (REUTERS) EXTERIOR OF THE BANK OF GREECE ENTRANCE DOORS OF BANK BANK SIGN BANK OF GREECE GOVERNOR YANNIS STOURNARAS IN HIS OFFICE SPEAKING TO REPORTER (SOUNDBITE) (English) BANK OF GREECE GOVERNOR YANNIS STOURNARAS SAYING: "We have started the lifting of capital controls since the beginning, in successive steps, we plan the next step now, but of course nobody can give a final date because there are many uncertainties involved. Confidence is the most important thing, as we said before, the inclusion of Greek bonds into QE will be an important step towards lifting of capital controls, but capital controls beware is the end of the road, it's not the beginning, so we have to be very careful, that is why I am cautious, I don't want to give specific dates." STOURNARAS SPEAKING TO REPORTER (SOUNDBITE) (English) BANK OF GREECE GOVERNOR YANNIS STOURNARAS SAYING: "We have rebalanced the economy, but there is a legacy problem, a big legacy problem, which is high debt. As you know there is commitment - a Eurogroup decision as early as November 2012 which has been repeated many times since then - the last one was I think in May this year - and I think that after the finishing of the second evaluation of the program there is going to be a discussion about debt, about the necessary debt measures - to make the Greek debt sustainable." STOURNARAS LISTENING TO JOURNALIST (SOUNDBITE) (English) BANK OF GREECE GOVERNOR YANNIS STOURNARAS SAYING: "The amount that the ECB will buy is small, of course since the free float of Greek bonds is small it's going to be - its going to have a positive influence on yields and the price of bonds. But the second derivative - that is the importance of this in terms of confidence, symbolism, is vastly more important. It's like having a passport for us to re-enter markets again." STOURNARAS SPEAKING TO REPORTER EXTERIOR OF THE BANK OF GREECE GREEK FLAG ON BANK OF GREECE
- Embargoed: 25th November 2016 11:56
- Keywords: Eurozone Greece debt austerity capital controls banks governor Stournaras
- Location: ATHENS, GREECE
- City: ATHENS, GREECE
- Country: Greece
- Topics: Economic Events
- Reuters ID: LVA00157V32X9
- Aspect Ratio: 16:9
- Story Text: Greece will soon ease capital controls further but full liberalization will depend on progress in easing the country's debt burden, which is also a precondition for entering the ECB's asset buying scheme, central bank chief Yannis Stournaras said.
Propped up by three successive bailouts, Greece hopes to emerge from a long recession next year. But much of its outlook depends on getting a long-sought reduction of its huge debt pile, easing capital restrictions and inclusion in the ECB's 1.74 trillion asset buying scheme.
"We have started the lifting of capital controls since the beginning, in successive steps, we plan the next step now," Stournaras, a European Central Bank Governing Council member, told Reuters in an interview. "But of course nobody can give a final date because there are many uncertainties involved. Confidence is the most important thing, as we said before, the inclusion of Greek bonds into QE will be an important step towards lifting of capital controls, but capital controls beware is the end of the road, it's not the beginning, so we have to be very careful, that is why I am cautious, I don't want to give specific dates," he added.
Stournaras expects the government to quickly conclude the second bailout review, opening the way for talks on debt possibly in December, setting the stage for the ECB to include Greece in its quantitative easing asset purchase scheme.
"We have rebalanced the economy, but there is a legacy problem, a big legacy problem, which is high debt. As you know there is commitment - a Eurogroup decision as early as November 2012 which has been repeated many times since then...and I think that after the finishing of the second evaluation of the program there is going to be a discussion about debt, about the necessary debt measures - to make the Greek debt sustainable," the central bank chief said.
Debt relief has been one of the key sticking points. Germany opposes a move now, while the ECB and the IMF are both calling for an easing of the burden, possibly through longer maturities, lower rates on some bonds, and a smoother repayment schedule.
Stournaras made it clear that unless a serious discussion starts on debt, Greece will not be included in the ECB's sovereign bond-buying program. Inclusion could give the recovery a major boost.
Although the ECB could only buy relatively few Greek bonds, inclusion in its asset purchases would underpin confidence and help Greece eventually return to the bond market.
"The amount that the ECB will buy is small, of course since the free float of Greek bonds is small it's going to be - its going to have a positive influence on yields and the price of bonds. But the second derivative - that is the importance of this in terms of confidence, symbolism, is vastly more important. It's like having a passport for us to re-enter markets again," he said.
Cut off from global debt markets since 2014, Greece is anxious to regain market access before its current 86 billion euro bailout program expires in 2018.
Stournaras said the government could try a test bond issue next year. All elements of improvement are conducive to testing markets at some point not so far away, he said, but for this inclusion in QE was a precondition.
The International Monetary Fund has so far refused to put money into Greece's third bailout on the grounds that financial targets are unrealistic without major debt relief. But Stournaras said it was unlikely that the Fund would part ways with Greece, saying everyone realized the importance of the IMF staying in the program. - Copyright Holder: REUTERS
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