Spanish minister rejects private sector role in Greece

14th July 2011, Comments 0 comments

Spanish Finance Minister Elena Salgado joined the European Central Bank (ECB) Thursday in voicing opposition to private sector involvement in a future financial rescue plan for Greece.

"We always said we had to be careful ... that the participation by the private sector in resolving the Greek problem was not a good idea," Salgado told the German newspaper Sueddeutsche Zeitung in an interview.

"Debate over this question is one of the reasons for tensions on financial markets and it must be clarified as soon as possible, with a clear commitment by eurozone countries," the Spanish minister added.

Salgado said the answer had to be found using mechanisms that existed already.

"All countries much assume their responsibilities, notably the big countries," she added.

That suggested she felt core eurozone member states such as France and Germany should pay more for a second Greek rescue plan, estimated at roughly the same amount as the first, or 110 billion euros ($156 billion).

Germany has called for private investors to share the cost of a second bailout for Greece, amid growing opposition by taxpayers to foot the bill a second time.

International ratings agencies have warned however that that would be tantamount to a default by Greece on its sovereign debt, in which case the ECB says it could not be used as collateral for loans to Greek banks.

The latest idea to circulate is the outright purchase of Greek debt by the European Financial Stability Facility (EFSF) at a discount on financial markets, followed by its cancellation, which would reduce Athens' debt burden.

© 2011 AFP

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