ECONOMY

Euro area tasks ECB, EU Commission to investigate Greek ESM bid

euro-area-tasks-ecb-eu-commission-to-investigate-greek-esm-bid

he European Commission and the European Central Bank was given the go-ahead to investigate Greece’s request for a new bailout loan, according to a letter from Jeroen Dijsselbloem, the euro-area finance ministers’ chief.

The institutions will now look into whether Greece poses a financial stability risk, whether its public debt is sustainable, and “assess the actual or potential financing needs of the Hellenic Republic,” according to Wednesday’s letter from Dijsselbloem to ECB President Mario Draghi and the commission’s President Jean-Claude Juncker.

Greek Prime Minister Alexis Tsipras submitted a request for a three-year bailout program earlier in the day. Finance ministry deputies in the Euro Working Group held a conference call to discuss the Greek bid, which in turn allowed Dijsselbloem to task the institutions to start their work.

Tsipras now must send details of his plan to the institutions so they can put together the documents needed to begin formal bailout talks. Euro-area leaders have set a Thursday deadline for Greece to send the follow-up information. There will be technical work followed by weekend meetings of finance ministers and European Union leaders in Brussels.

The European Stability Mechanism, the euro-area’s firewall fund, posted the letter on its website. Copies were sent to ESM chief Klaus Regling, International Monetary Fund Managing Director Christine Lagarde, Greek Finance Minister Euclid Tsakalotos and EWG head Thomas Wieser.

Greece’s Wednesday request for a new ESM program replaces an earlier request that Tsipras sent before his nation’s July 5 referendum. Dijsselbloem didn’t pass that request on to the institutions, saying no talks would take place until there was a chance to take stock of the referendum’s outcome.

After Tsipras sent in the new request, euro-area finance ministers elected to ask their deputies to examine it. Germany raised procedural concerns that were discussed before the officials elected to allow the request to proceed, according to two officials familiar with the talks, who asked not to be named because the talks are private.

[Bloomberg]