Bloomberg News

Politicians Shouldn’t Pressure ECB on Losses, Sweden’s Borg Says

January 31, 2012

Jan. 27 (Bloomberg) -- Politicians shouldn’t pressure the European Central Bank to join private creditors in taking losses on Greek debt, Swedish Finance Minister Anders Borg said.

Such pressure could make the ECB regret its decision to help struggling euro nations such as Greece through bond purchases, Borg said in an interview with Maryam Nemazee on Bloomberg TV today from Davos, Switzerland.

“If they are forced to take a broad loss on Greek paper, they are more likely to come to the conclusion it was a mistake to become more active on these issues,” Borg said. “I would prefer that we make it easier for the ECB to take an active role in combating this crisis. So the politicians should not put pressure on the ECB to take losses.”

European officials and the International Monetary Fund have yet to strike a deal with Greece’s private creditors on losses as both parties strive to reach a voluntary agreement that leaves the euro nation with a sustainable debt load. European officials have said that concessions made by private creditors don’t go far enough, while the IMF has signaled public debt holders may also have to increase their support in any deal.

Borg criticized Greece for not pushing through the necessary reforms to bring the economy on a sustainable footing, and said the euro area’s most indebted nation is “destroying” its credibility. He praised the market for pressuring countries to “do the right thing” as well as austerity programs in Italy and Spain.


“Italy has recognized that it’s in a deep crisis and that they need structural reforms to regain competitiveness,” Borg said. Italy’s Prime Minister Mario Monti “is a game-changer in that respect,” he said.

Finland’s Prime Minister Jyrki Katainen also told Bloomberg TV in Davos that the focus in Europe should be on boosting confidence through fiscal responsibility.

“We cannot afford to stimulate the economy,” he said. “Growth comes when the confidence comes back and the confidence comes back when you do structural reforms even though it takes time.”

While the European debt crisis is still “ongoing” and reforms take years, “markets want to see decisions” by indebted countries to reform their economies, Katainen said.

--with assistance by Ola Kinnander in Stockholm. Editors: Tasneem Brogger, Jonas Bergman.

To contact the reporter on this story: Toby Alder in Stockholm at

To contact the editor responsible for this story: Tasneem Brogger at

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