ECB Snubs Concerns over Greek Crisis Repeat

Finance | April 24, 2010, Saturday // 13:26|  views

Jean-Claude Trichet President of the ECB during a press conference after the G-20 Meeting of Finance Ministers and Central Bank Governors during the Spring Meeting of the IMF in Washington DC, USA, 23 April 2010. Photo by EPA/BGNES

European Central Bank officials have given the cold shoulder to concerns that the Greek budget crisis may spill over to other euro region countries such as Spain or Portugal.

“All countries in Europe without any exception have a lot of work to do,” ECB President Jean-Claude Trichet said after meeting with Group of 20 finance chiefs in Washington, as cited by Bloomberg agency.

At the same time, “of course Spain is not Greece,” he added.

“The decisive aid for Greece is a signal to markets and the speculation that it is not realistic, to be expected or acceptable to attack other sovereigns,” ECB Governing Council member Ewald Nowotny said. “The fiscal situation of Spain and Portugal cannot be compared with Greece.”

Greece's prime minister asked on Friday for the activation of a joint eurozone-International Monetary Fund financial rescue plan.

“It is a matter of national need to ask officially” for the activation of the EU-led aid mechanism, George Papandreou said in a televised address from the Greek island of Kastelorizo.

The rescue package will provide Greece with loans from other eurozone countries to the tune of EUR 30 B at interest rates of about 5%, and about EUR 10 B from the IMF.

The news comes a day after it was confirmed that the Greek government ran up a budget deficit of EUR 32.34 B in 2009, representing 13.6% of gross domestic product (GDP) far worse than expected.

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Tags: greece, banks, banking system, Greek banks, Simeon Djankov, Eurozone, IMF, finance minister, Fitch

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