Bloomberg News

Nowotny Says Discussions About Greek Euro Exit Are Premature

May 10, 2012

European Central Bank Governing Council member Ewald Nowotny said any talk about Greece’s exit from the monetary union is premature.

“It’s a premature discussion,” Nowotny told reporters in Vienna today. “What we have to discuss now is how to solve this situation. The key for solving this lies with the Greek government and the political system. We have to see how this is developing but we don’t have an infinite amount of time. Time flies.”

Greek lawmakers are struggling to form a government after parliamentary elections on May 6 didn’t deliver a clear winner. That’s reignited concerns about the country’s willingness to meet the terms of its two bailouts and prompted speculation that Greece may abandon the euro.

Greece must be aware that there’s no alternative to implementing the reforms it has agreed upon “if it wants to remain a member of the euro zone,” ECB Executive Board member Joerg Asmussen said in an interview with German business daily Handelsblatt on May 8.

Asked whether the ECB has a plan for how to handle a Greek exit, Nowotny said: “Even if we had one we wouldn’t tell you about it. This is not a matter, with all due respect, to discuss in a press conference.”

Growth projections for southern countries in the euro area might have to be revised down, while the outlook for countries in the northern and western part of the region, including Austria, might be better than currently predicted, Nowotny said. He declined to comment on the new forecasts the ECB is due to publish next month.

Nowotny also said the ECB has several tools to absorb liquidity from financial markets if needed.

“If the need comes we do have an arsenal also to be active on the restrictive side,” Nowotny said. “But it’s important to say that now is not the time.”

To contact the reporters on this story: Jana Randow in Vienna at jrandow@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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