ECB review will clarify Greece’s needs, says Regling
A review of the European banking sector due to be released on Oct. 26 should bring clarity on Greece’s funding needs, the head of the monetary union’s bailout fund said on Monday.
Klaus Regling, head of the European Stability Mechanism (ESM), also said the euro zone should keep the funds it is allocating for crisis resolution for future use rather than invest them in the economy now.
Regling said the European Central Bank’s asset quality review (AQR) of 130 leading banks would show how much money Greece has left in its existing bank bailout fund and how much more it would need from emergency sources.
“This is not completely clear at the moment because Greece is waiting for the results of the AQR and stress tests,» he said.
Greece’s bank bailout fund HFSF has 11.4 billion euros in leftover money which Athens wants to use as a reserve to cover its funding needs after the end of the year, when it hopes to exit its EU/IMF bailout programme.
“There is some uncertainty. There will be continued talks in the next Eurogroup in November, December to decide what to do,» Regling said.
Greek Prime Minister Antonis Samaras told Reuters on Friday one option Greece was a credit line that Athens could tap post-bailout should it fall prey to future market turmoil.
Regling also told reporters some countries wanted to use ESM funds to support growth but it was necessary to have a buffer.
“As a crisis institution it is important to have a lot of unused firepower,» he told reporters.
“We all know that as we move out of this crisis there will be another crisis one day,» he said during a visit to Slovakia.
The ESM was set up to safeguard and provide instant access to financial assistance programs for euro zone members in financial difficulty. It has a maximum lending capacity of 500 billion euros.
Berlin has said it was against plans to add tasks to the ESM. A change in the fund’s mandate would need consent from all 18 euro zone member states.
[Reuters]
