BRUSSELS(Dow Jones)--Euro-zone governments are likely to require countries that seek collateral for a new round of lending to Greece to pay for it, a senior euro-zone official said Wednesday.
The idea is part of a proposal from the European Commission and the European Financial Stability Facility, the euro zone's sovereign rescue fund, to resolve a dispute sparked by demands from Finland for collateral to secure additional lending to Greece. The proposal also calls for countries that want collateral to receive Greek bank shares owned by the Greek government as collateral, the official said.
The July 21 euro-zone deal to expand the powers of the EFSF designates money for Greece that can be used by the Greek government to recapitalize its banks. The government would receive shares from the banks for doing so.
Euro-zone governments would pay these collateral fees to the EFSF, the official said. The idea behind charging such fees would be to minimize government requests for collateral.
"There is enormous demand for anything that's free," the official said.
The International Monetary Fund may oppose any proposal to provide collateral, fearing the idea could jeopardize its preferred creditor status. But the hope is that the request for collateral would be so minimal that the IMF could accept it, the official said.
There are still discussions to offer non-cash Greek government assets other than government-owned bank shares as collateral, the official said.
Source: http://online.wsj.com
The idea is part of a proposal from the European Commission and the European Financial Stability Facility, the euro zone's sovereign rescue fund, to resolve a dispute sparked by demands from Finland for collateral to secure additional lending to Greece. The proposal also calls for countries that want collateral to receive Greek bank shares owned by the Greek government as collateral, the official said.
The July 21 euro-zone deal to expand the powers of the EFSF designates money for Greece that can be used by the Greek government to recapitalize its banks. The government would receive shares from the banks for doing so.
Euro-zone governments would pay these collateral fees to the EFSF, the official said. The idea behind charging such fees would be to minimize government requests for collateral.
"There is enormous demand for anything that's free," the official said.
The International Monetary Fund may oppose any proposal to provide collateral, fearing the idea could jeopardize its preferred creditor status. But the hope is that the request for collateral would be so minimal that the IMF could accept it, the official said.
There are still discussions to offer non-cash Greek government assets other than government-owned bank shares as collateral, the official said.
Source: http://online.wsj.com
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