Greek rescheduling could be fatal for euro: French regulator
A rescheduling of Greek debt would solve nothing but could mark "the beginning of the end" of the eurozone, the head of the French AMF market regulating body Jean-Pierre Jouyet warned on Friday.
But a rescheduling could also mark the opening of a new phase of cooperation between EU governments, he said.
Jouyet, who is president of the French Authority for Financial Markets, referring to German pressure for a rescheduling, told RTL radio: "That could be either the beginning of the end, or the beginning of a new (phase) of European integration."
He said: "What is at stake through Greece is the credibility of the eurozone and of the construction of Europe."
He said: "The Greek problem reveals that there is a very strong clash between a single currency ... and an economic and financial organisation for Europe which is not strong enough."
The Greek crisis also showed that some European countries "are living above their means."
He said that a rescheduling of Greek debt would not solve the problems confronting Greece, would undermine confidence in commitments by Europe, and would not permit the European Central Bank to continue helping Greece.
This was a reference to warnings by the ECB that a restructuring could pose such dangers of an outflow of funds from Greece and that the ECB could no longer provide continuous support to the Greek banking system.
Jouyet's use of the term "construction of Europe" refers to the founding principles of the European Union after World War II to ensure stability in Europe via a new architecture of common policymaking.
France, like the ECB, has expressed strong reservations about pressure from Germany for private lenders to Greece to accept to lose money as part of any new rescue.
French President Nicolas Sarkozy and German Chancellor Angela Merkel were meeting in Berlin on Friday precisely on this matter.
Asked about this disagreement, Jouyet said that it did not concern the fundamental issues but only the means of reaching a solution.
Objections to a restructuring of Greek debt involving losses for banks, insurance companies, savings and pension funds which have lent money to Greece, are based on concern that such a route would radically reduce confidence in Greece.
That could cause an outflow of funds, ramp up pressure on other weak eurozone members, and may cause the ECB to enact its threat to cut off lifeline finance to the Greek economy via the banks.
© 2011 AFP