By Sotiris Nikas

European economy and finance ministers continued to push for a compromise by private holders of Greek debt on Tuesday during the Ecofin meeting in Brussels, but it appears that the European Central Bank will have a key role in the restructuring process.

“The current state of the negotiations with the private creditors is that we are a bit short of where we want to be,” German Finance Minister Wolfgang Schaeuble told reporters after the Ecofin meeting. “As long as we do not have debt sustainability, there will not be a new program,” he added, effectively playing the Greek default card.

However Kathimerini understands that although no such decision has been made by the ECB yet, Monday’s Eurogroup meeting decided in favor of the lender’s participation in the haircut as the only way for talks on the debt restructuring not to fail.

An indication of this came in a statement by Finance Minister Evangelos Venizelos, who argued that among the topics discussed was the search for an indirect way of increasing the participation of the so-called “official” sector -- the Greek government, the European Union, International Monetary Fund and ECB -- in a way that would not entail an increase in loans to Greece.

Although he stopped short of saying it in clear terms, the only such way is the ECB’s participation in the 50 percent haircut. At the moment, the ECB holds 45-50 billion euros in Greek bonds and its participation in the haircut would signify a benefit of 10-12 billion euros for Greece.

Talks have stalled as the official sector is asking for a coupon of no more than 3.5 percent on the new bonds to complete the debt swap, while private bondholders have insisted on at least 4 percent; still, Kathimerini understands that the pressure from European governments has resulted in the private sector being more ready to accept an average rate of 3.5-3.75 percent.

Charles Dallara, managing director of the Institute of International Finance (IIF), said on Tuesday he was hopeful of finding “common ground” in the coming days on a Greek debt swap.

“It’s important for all parties to recognize how much we have at stake here and that we work together cooperatively,” he told a press conference in Zurich, adding that he sees the strains on the financial system extending around the globe. He stressed that all parties will need to honor the October 27 eurozone summit decision.