February 2, 2012
The European Central Bank must take part in Greece's debt swap, Finance Minister Evangelos Venizelos said on Thursday, warning that a rescue package for Athens also hinges on other issues being resolved such as labor reforms and how Greek banks are to be recapitalized.
Prime Minister Lucas Papademos still hasn't secured broad political support for yet more austerity - another key condition to clinch a deal and avoid a chaotic default - with a meeting of political leaders yet to be pinned down.
Officials have said repeatedly in recent weeks that a deal is around the corner, and European Union Economic and Monetary Affairs Commissioner Olli Rehn reiterated on Thursday that the debt swap deal could be agreed by the end of the week.
Euro zone finance ministers aim to approve the second financing package for Greece on Monday, including agreement on official new financing, the size of voluntary losses private bondholders are willing to accept and new reforms Athens must undertake.
With Greece's talks with banks and insurers almost complete, the focus has turned to determining whether and how the ECB and other central banks would take part in the debt swap deal, and to coaxing Greek party chiefs into backing reforms so that a 130 billion euro rescue plan can be secured in time.
"In parallel with negotiations with private creditors, there must be negotiations for the official sector involvement. This means that the ECB must be mobilized, and we must resolve issues pertaining to national central banks," Venizelos told socialist party lawmakers, in the strongest appeal yet from Athens for the Frankfurt-based central bank to help reach a deal.
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