BERLIN: Central banks in Europe should not increase their exposure to Greece due to the high level of political uncertainty there, Bundesbank president Jens Weidmann said in a newspaper interview published on Sunday.
"Indeed, I would not consider it to be right for the euro system to further increase its level of risk for Greece," Weidmann told the Frankfurter Allgemeine Sonntagszeitung newspaper.
"Greek and European political leaders have to decide what happens next as quickly as possible," Weidmann said, referring to the uncertain situation after an inconclusive election result earlier this month plunged Greece into political disarray.
"In face of the extremely uncertain situation it is, in my view, the job of financial policy makers to decide if European taxpayers should shoulder the additional risks," Weidmann said, adding he did not believe that exposure should be raised now.
Weidmann has already made it clear that Greece will not receive any more financial aid if it does not stick to the agreed bailout agreement.
Greece was plunged into turmoil after an election boosted far-left and far-right groups, stripping mainstream parties that back a painful EU/IMF bailout of their parliamentary majority.
A Greek exit from the euro zone could expose the European Central Bank (ECB) and the currency bloc it seeks to protect to hundreds of billions in losses, landing Germany and its partners with a crippling bill.
Weidmann, who is also an European Central Bank policymaker, added that the ECB and the Bundesbank would face losses if Greece were to leave the euro zone. "I don't want to speculate about any various scenarios," he said.
"But there is a threat of losses for the ECB and the Bundesbank and thus for German taxpayers in the event of (Greece leaving the euro zone)." Weidmann said the decision of whether Greece will stay in the euro zone "lies in the hands of the Greek public and their elected representatives."
He said, however, that a country has to be aware of the consequences when it unilaterally breaks agreements with its international partners.
"A decision like that would certainly hurt Greece hardest," he said.
"It's of fundamental importance that there can be no help without Greece making the agreed-upon efforts themselves: for the concrete case of Greece also for the agreements with other countries and also for the stability orientation of the currency union."
indiatimes.com
"Indeed, I would not consider it to be right for the euro system to further increase its level of risk for Greece," Weidmann told the Frankfurter Allgemeine Sonntagszeitung newspaper.
"Greek and European political leaders have to decide what happens next as quickly as possible," Weidmann said, referring to the uncertain situation after an inconclusive election result earlier this month plunged Greece into political disarray.
"In face of the extremely uncertain situation it is, in my view, the job of financial policy makers to decide if European taxpayers should shoulder the additional risks," Weidmann said, adding he did not believe that exposure should be raised now.
Weidmann has already made it clear that Greece will not receive any more financial aid if it does not stick to the agreed bailout agreement.
Greece was plunged into turmoil after an election boosted far-left and far-right groups, stripping mainstream parties that back a painful EU/IMF bailout of their parliamentary majority.
A Greek exit from the euro zone could expose the European Central Bank (ECB) and the currency bloc it seeks to protect to hundreds of billions in losses, landing Germany and its partners with a crippling bill.
Weidmann, who is also an European Central Bank policymaker, added that the ECB and the Bundesbank would face losses if Greece were to leave the euro zone. "I don't want to speculate about any various scenarios," he said.
"But there is a threat of losses for the ECB and the Bundesbank and thus for German taxpayers in the event of (Greece leaving the euro zone)." Weidmann said the decision of whether Greece will stay in the euro zone "lies in the hands of the Greek public and their elected representatives."
He said, however, that a country has to be aware of the consequences when it unilaterally breaks agreements with its international partners.
"A decision like that would certainly hurt Greece hardest," he said.
"It's of fundamental importance that there can be no help without Greece making the agreed-upon efforts themselves: for the concrete case of Greece also for the agreements with other countries and also for the stability orientation of the currency union."
indiatimes.com
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