Friday

29th Mar 2024

Draghi says ECB didn't 'blackmail' Greece

  • Draghi - No special ECB rules for Greece (Photo: ecb.europa.eu)

European Central Bank (ECB) president Mario Draghi has rejected suggestions the bank is blackmailing Greece by making it tougher for its cash-strapped government and banks to access funding.

“What sort of blackmail is this?,” said Draghi in response to questions by MEPs on the European Parliament’s economic affairs committee on Monday (23 March).

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Some members had hinted that the bank’s decision in February to withdraw a waiver that allowed the ECB to accept Greek debts as collateral amounts to undue pressure.

But Draghi pointed out the ECB is exposed to Greek liabilities totalling €104 billion Greece, up from around €50 billion in December, which he said is equivalent to 65 percent of the country's economic output.

“We are not creating rules for Greece. We are simply using existing rules. Greek bonds are below the normal level of collateral,” he added.

This decision came in response to the Syriza’s government’s announcement it would halt implementation of Greece’s bailout programme and attempt to renegotiate it.

But, starved of money from both its creditors and the ECB, Greece is now thought to be just weeks away from running out of cash, weakening its position in the bailout talks.

Questioned by German centre-left MEP Jakob von Weizsacker on whether the Greek banking sector had liquidity problems or is facing bankruptcy, Draghi said ‘‘the liquidity situation has been deteriorating” but remains solvent.

Draghi called on the Greek government and its creditors to agree a speedy compromise that would see Greece honour its debts and return to its bailout programme.

“We are ready to reinstate the waiver as soon as the conditions for successful conclusion of the review are in place," he said.

“What is needed is to restore a policy process of dialogue".

The hearing was Draghi’s first with deputies since the ECB began its €1.1 trillion government bond-buying programme.

Since then the euro has plunged to its lowest level in more than a decade against the US dollar, but the economic prognosis for the eurozone has improved. The ECB has revised its growth forecasts for 2015 up by 0.5 percent.

“The basis for the economic recovery in the euro area has clearly strengthened,” said Draghi, adding that this is “due to, in particular, the fall in oil prices, the gradual firming of demand, and the depreciation of the euro".

He said the bank’s programme - which involves buying €60 billion of public sector bonds each month until September 2016, is on track: "We see no signs that there will not be enough bonds for us to purchase”.

Responding to concerns expressed by German conservative MEP Burkhard Balz about low interest on savings caused by the quantitative easing programme, Draghi replied that the ECB is “aware of the situation which savers have to bear with” but that “as confidence and growth returns so will interest rates”.

Critics of the programme would “eventually reach a point of willing acceptance,” he told deputies.

ECB ratchets up pressure on Greece

In a surprise move, the ECB on Wednesday said it will no longer accept Greek bonds as collateral for loans, giving Athens one week to agree with creditors or face cashflow problems.

ECB to tighten noose on Greek government

The European Central Bank is set to make it illegal for Greek lenders to increase their purchases of short-term government bonds in a move that will tighten the funding noose on the Greek government.

Opinion

The euro-crisis and the Greek crisis

It was the Greeks who chose the politicians that led the country into disaster. But is it really as simple as that?

Agenda

Still waiting for Greece, this WEEK

The long wait for the list of Greek reforms is due to end on Monday, but its government has missed deadlines before.

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us