ECB Head: Restore Dialogue Between Greece, Creditors

The head of the European Central Bank said it stands ready to restore support for Greece’s banks if talks between the Greek government and its creditors get back on track.

Mario Draghi told EU lawmakers Monday that the parties should “restore the policy dialogue” so talks can yield “a credible perspective” for a deal on more emergency aid.

Greece and its creditors in the 19-country eurozone have sparred over the conditions Greece needs to fulfill to get more help to avoid defaulting on its debts. Greek Prime Minister Alexis Tsipras met German Chancellor Angela Merkel to try to break the logjam.

Once a deal is in sight, Draghi said the ECB could restore the ability for Greek banks to tap ECB credit using Greek government bonds as collateral. Being able to use the bonds is an important source of funding to help keep Greece’s financial system afloat. For now, Greek banks have been forced to borrow at higher costs from the Greek central bank.

Draghi rejected a comment from one lawmaker that the ECB was “blackmailing” Greece into yielding to creditor conditions. He noted that the ECB held 104 billion euros ($124 billion) of credit exposure to Greece. “What kind of blackmail is this?” he said, calling the statement “a bit rich.”

“We are not creating rules for Greece… we are simply observing existing rules.”

This article appeared in print in the March 24th, 2015 edition of Hamodia.