Wall Street Journal
June 27, 2011
A debt restructuring isn't an alternative option for Greece as the consequences of such an event on Europe's financial markets could dwarf the bankruptcy of Lehman Brothers, a key member of the European Central Bank's executive board said Monday.
"A restructuring—that is often discussed in the case of Greece—constitutes absolutely no alternative" to adjustment and reform, warned Jürgen Stark, a hawkish German member of the ECB's board, according to the text of a speech given in Berlin.
"The effects of a restructuring on the stability of the financial market system in Europe are not foreseeable and could dwarf the impact of the Lehman insolvency. Anyone who claims otherwise, mistakes the complexity of the situation."
Mr. Stark added that the ECB continues to "keenly" warn against any solution to the Greek crisis that results in a so called "credit event," or in Greece being classified as in "selective default or worse."
Furthermore, the central bank rejects any solution that "would carry out any coercion on private creditors."
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