ECONOMY

Euro’s existence doesn’t depend on Greece, says Bundesbank

The euro will not fall if Greece quits the single currency area, German central bank chief Jens Weidmann said in a newspaper interview published on Thursday.

“The continued existence of the euro is not tied to the development in Greece. But certain contagion effects cannot be ruled out because the character of monetary union would be altered by a ‘Grexit’,” Bundesbank president Weidmann told French daily Les Echos.

The interview was also published in the Spanish and Italian dailies El Mundo and La Stampa.

A so-called Grexit would be an exit by Greece from the euro area.

“The character of monetary union would also change if individual countries do not fulfil their responsibilities for a stable currency and turn monetary union into a transfer union which their populations never voted for,” Weidmann continued.

“That is also a contagion effect, the negative consequences of which should not be underestimated.”

He insisted that “the responsibility over whether Greece stays in the eurozone lies with the Greek government.”

“The last few days have shown that there isn’t much time left to reach an agreement,” Weidmann continued.

Eurozone finance ministers were set to hold crunch talks over Greece in Luxembourg Thursday, after a barrage of warnings that the country risks a damaging exit from the EU if it fails to strike a deal with its creditors.

As negotiations between Athens, the EU, ECB and IMF over the last 7.2 billion euro ($8.1 billion) tranche of Greeces massive international bailout grew increasingly acrimonious this week, officials started openly discussing the prospect of Greece crashing out of the euro.

“The ball is definitely in the court of the Greek government in which direction they want to take their country,” Weidmann said.

“Despite the risks from a state default and possible contagion effects, we have to ensure that the foundations of monetary union as a stability union are not undermined. Aid and solidarity are part of that, but agreements must be adhered to,” he said.

“A revocation of the agreements and a halting of repayments to the partners who have provided aid, or to the European Central Bank, would certainly have consequences for Greece which would be difficult to keep under control,” Weidmann warned.

[AFP]