European Central Bank Governing Council member Yannis Stournaras said a Greek exit from the euro area isn’t an option and wouldn’t help the country’s economy in the long term, as he urged the government to act quickly to agree on reforms with the country’s creditors.
“Grexit would deliver no benefit but a lot of pain,” Stournaras, who heads the Greek central bank, said at an event in London on Wednesday. “The new Greek government has a unique opportunity to implement bold structural reforms, which would be backed by a large majority of political forces in the country.”
Euro-area ministers are losing patience with the government of Alexis Tsipras, almost five weeks after they gave him an extra four months to complete an overhaul of the Greek economy in return for aid. The dispute has unsettled the banking system, and Stournaras won permission from the ECB on Wednesday to increase the availability of emergency funds.
“There was some outflow of deposits due to uncertainty,” said Stournaras, a former Greek finance minister. “Emergency Liquidity Assistance has been provided so that there’s no problem for the banking system.”
The Governing Council raised the cap on ELA provided by the Bank of Greece to just above 71 billion euros ($78 billion) in a telephone conference, people familiar with the matter said, asking not to be named because the call was private. The increase of more than 1 billion euros was the biggest this month.
Stournaras argued that if Greece implements “bold” reforms in pensions, social security and labor markets, it could hope for some relief on the cost and duration of its debt.
“Extending maturities and reducing interest rates on the outstanding debt may improve the growth outlook of the Greek economy,” he said. “Alternative options could also be considered to improve the sustainability of Greece’s public debt. However, they might be more contentious, as they likely involve some costs for euro-area partners.”