The dire situation regarding the national finances for Greece came to another boiling point as Greek Prime Minister Antonis Samaras voiced a directed plea for an “accommodating policy” to the ECB (European Central Bank). This plea was to ease financial obligation on Greece’s current debt and payments of interest on borrowed money.
These recent pleas for accommodation were voiced by the Greek Prime Minister in the light of recent proposed austerity measures. These additional measures were met with strong opposition from the people of Greece. The Prime Minister is quoted as saying “if they could roll them over for instance that would be positive, that would make the funding gap much smaller.”
The newly proposed austerity measures amounted to nearly €13.5 billion. These austerity measures were to take place in the ensuing two years.
However, the response from the European Central Bank was to hold Greece to its current financial and legal commitments. In a statement released by Joerg Asmussen, a board member with the ECB, it was asserted that no more leniency would be provided and that Greece needed to follow through on its financial commitments.
The rationale for holding the line on Greece and denying further pleas for accommodation were based on the fact that the European Central Bank could not take this direction because this action would be defined as providing further financial support for the country of Greece and this would not be permissible. He further expounded by saying this would not be permissible because it would be contrary to the laws in place that govern the ECB.
Additionally, in addressing an extension of time requested by Greece to provide payments, approval of that action would be basically saying that more time is required so that Greece could reach out to other financial entities to obtain the needed money to meet the financial payments due. The logic of their request for more time would be erroneous because it’s not more time, but more money than is needed to meet the terms of the loan.
Recently, a number of verbal pledges had been expressed by members of the European Central Bank regarding the commitment to stabilize the euro and to ensure the fidelity of that currency. These verbal statements went far to assure the global market that the euro currency would not be allowed to disintegrate. However, the call to action is now growing and that call to action includes reforming measures that would be implemented by all members of the euro zone including the countries of Germany and France.
This coming week, finance ministers representing the euro zone will gather in Luxembourg. This meeting is the first meeting for the group now known as the Board of Governors of the European Stability Mechanism (ESM). This group will replace the current European Financial Stability Facility. This entity was established with the sole purpose of being the euro zone’s permanent bailout fund.
Adding to the commitment of the euro zone to stabilize the finances of Greece is a pending visit from the Chancellor of Germany. This is the first visit by German leadership to the nation of Greece to specifically show support for the long-term financial stability of Greece.
