Jean-Claude Juncker, Luxembourg’s prime minister and chair of the euro group of finance ministers, said on Monday night that Greece’s situation had changed since its bailout plan was adopted in July, so “technical revisions” to the programme could be made.
However, euro area ministers postponed making a decision on granting the next tranche of financial aid to Greece or revising the terms of the country’s economic and financial reform regiment.
“I would like to reassure you that, despite the change in the schedule, Greece will be in a position to meet its financial obligations,” Juncker (photo, right) said. The prime minister said the euro group “was likely” to decide later this month, and “firmly ruled out” any chance that the troubled nation would default or leave the euro zone.
The Wall Street Journal cited several sources saying “the notion of bigger losses for creditors was broached” during ministerial meetings on Tuesday. Leaders privately admit Athen’s budget gap is simply too wide to continue avoiding bigger losses for bondholders.
Berlin is pushing for more private sector pain, to lighten the amount German taxpayers will have to bear, while Paris objects to a change in plans, out of concern for French banks heavily exposed to Greek debt.
Boosting banks
In fact, ministers also recognised the need to boost banks across Europe and discussed potential EU-wide recapitalisation schemes. Ollie Rehn, European commissioner for economic affairs said in an interview with the Financial Times: “There is an increasingly shared view that we need a concerted, co-ordinated approach in Europe” to supporting banks.
“There is a sense of urgency among ministers and we need to move on,” he told the newspaper. Rehn (photo, left) said increasing banks’ “safety margins” would “reduce uncertainty” and was vital to restoring confidence in the markets.
While “no formal decision” on the banking sector was made during this week’s meetings in Luxembourg, Rehn said coordination between EU institutions was already increasing.
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