May 26, 2011
Amid growing expectations that Greece will have to restructure its debt, the German finance minister, Wolfgang Schäuble, warned Thursday that a default could have grave and unpredictable consequences.
But Mr. Schäuble’s comments left room for a less radical solution in which Greece might be given more time to pay its debts.
“There is no experience with what happens when a country inside a currency union becomes insolvent,” Mr. Schäuble said in an interview published Thursday in the German newspaper Handelsblatt.
European leaders have begun to discuss openly the possibility of extending the payback period for Greek debt, despite fierce opposition to that idea from the European Central Bank. Mr. Schäuble’s comments were interpreted by some as a sign that he had moved closer to the central bank’s view.
“We believe that today’s interview is key for markets in that it shows that politicians in charge of the matter in Germany, namely Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble, remain opposed to a rescheduling for the time being,” analysts at Barclays Capital wrote in a note.
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