Greek banks may soon run out of collateral to access European Central Bank refinancing unless Athens reaches an agreement with the European Union and International Monetary Fund on economic reforms, France’s central bank chief said.
The remarks by Banque de France Governor Christian Noyer, to be published by Le Figaro on Monday, came as Athens struggled to scrape together cash to meet a May repayment deadline on almost 1 billion euros ($1.08 billion) due to the IMF.
“At some point, Greek banks are likely to be unable to offer enough collateral to access refinancing even for emergency liquidity,» Noyer was quoted as saying.
“It is therefore urgent that Greece put an end to the current situation and that Athens should establish a programme with the IMF and the backing of other eurozone countries in order to reestablish confidence.”
Noyer added that Greece’s possible exit from the euro would be «a trauma for the eurozone» whose impact would be felt more widely across the global economy.
“But it’s generally acknowledged that the most dramatic consequences would be felt by Greece,» he said, «which would suffer a major economic crisis while doing nothing to resolve its fundamental problems of growth and unemployment.”