ECONOMY

ECB’s Nowotny warns Greece against perils of leaving eurozone

Greece would benefit little from leaving the euro, a senior European Central Bank policymaker cautioned on Wednesday, warning that it would cut Greeks’ income and offer little benefit beyond helping tourism.

“If you think of Greece and a big devaluation of the currency, going out of the euro and having their own currency — would that be helpful? I doubt it very much,” Ewald Nowotny, a member of the ECB’s decision-making Governing Council, told a conference in Frankfurt.

“There is just one industry that would be affected, tourism,” said Nowotny, who is also head of Austria’s central bank. “Otherwise, I don’t see very much what would be affected. On the other hand, it would … increase product prices.”

“That would mean it would reduce the real level of income and you would be back exactly where you are now,” he said, describing the idea that such a move could help as an “illusion.”

[Reuters]