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ECB officials have warned for weeks that a debt restructuring would have catastrophic consequences for the euro zone and stepped up their rhetoric this week after Eurogroup Chairman Jean-Claude Juncker suggested the bloc was open to a voluntary extension of Greek debt maturities. "For the ECB, according to our statutory obligations, a debt restructuring would undermine the collateral adequacy of Greek government bonds," the ECB's Stark said. "This means that a debt restructuring would make the continuation of large parts of central bank liquidity provision to the banking system of Greece impossible." The comments, and a report in the Financial Times Deutschland, that ECB President Jean-Claude Trichet had issued the same warning to euro zone finance ministers in a heated meeting of the Eurogroup on Monday, weighed on the euro, which slipped to $1.4235.
"For the ECB, according to our statutory obligations, a debt restructuring would undermine the collateral adequacy of Greek government bonds," the ECB's Stark said.
"This means that a debt restructuring would make the continuation of large parts of central bank liquidity provision to the banking system of Greece impossible."
The comments, and a report in the Financial Times Deutschland, that ECB President Jean-Claude Trichet had issued the same warning to euro zone finance ministers in a heated meeting of the Eurogroup on Monday, weighed on the euro, which slipped to $1.4235.
Then the ECB cannod deny liquidity to the "good banks". Economics is politics by other means
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