May 10, 2011
A Greek debt restructuring would have dire consequences, ECB policymakers warned, with one suggesting the bank would be unlikely to help the euro zone recover from the shock by delaying interest rate hikes.
Ewald Nowotny, one of three members of the European Central Bank to voice opposition on Tuesday to a restructuring, said he favored giving Greece more time to repay its aid rather than issuing new loans.
"You have to be aware that this would immediately have massive consequences for the Greek banking system and for the banking system overall," Nowotny told Austrian radio. "That would only heighten the crisis."
Asked whether Greece would get extra aid, Nowotny said: "It does not have to be fresh loans. It could also be a question of the time horizon of how long one has to repay," noting that Greece had to repay 25 billion to 30 billion euros next year.
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