Financial Times
July 7, 2011
Eurozone governments should not assume the private sector will participate in a new Greek bail-out deal, the European Central Bank has warned, escalating its conflict with finance ministers over the future of the indebted country.
“You cannot presume that it is normal ... to have some kind of private sector involvement,” Jean-Claude Trichet, ECB president, said, adding that the eurozone should follow “global doctrine” on bail-outs for crisis-hit nations.
Mr Trichet’s comments were the closest he has come to suggesting publicly that governments abandon attempts to involve commercial banks without ratings agencies declaring a selective default. So far no deal has been struck, despite a series of emergency meetings across Europe in recent weeks.
Earlier on Thursday the Netherlands’ finance minister said private sector holders of Greek government debt should be compelled to participate. “If a mandatory contribution from the banks lead to a short term and isolated rating event, that is not so bad,” Jan Kees de Jager told a Dutch newspaper in comments that added to investors’ nervousness.
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