Switch to realism on credit sector

In the e-mail sent to the Eurogroup by Finance Minister Yanis Varoufakis on Tuesday the government appears to have swung closer toward reality in terms of the credit sector, abandoning all previous policy statements on strengthening the state’s role in banks and tackling nonperforming loans.

The list of reforms signed by Varoufakis includes Greece’s commitment to allowing banks to operate on purely commercial principles and pledges that the management of bad loans will be undertaken in such a way that lenders’ capital bases will not be affected and that borrowers who are able to pay their dues but do not will be punished.

The government has also promised to cooperate with the Single Supervisory Mechanism, the European Central Bank and the European Commission on the operation of the HFSF bank bailout fund.