Financial Times
June 10, 2011
The German government on Friday signalled it would not back down in its stand off with the European Central Bank over the involvement of owners of Greek sovereign bonds in a new round of aid for the debt-ridden country.
Wolfgang Schäuble, German finance minister, told the country’s parliament he was sticking by his demand that the package observe “a fair distribution of risks between tax payers and private creditors”.
That followed Thursday’s warning by ECB president Jean Claude Trichet that forcing the involvement of Greece’s private creditors would be akin to a default, an “enormous mistake” that would rattle a recovering financial system.
Mr Trichet was reacting to a letter from the German finance minister to eurozone peers and the ECB in which he demanded that “substantial” numbers of private creditors agree to extending the maturity on Greek paper by seven years.
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