[Reuters] ECB's Stark warns against Greek 'selective default'
BERLIN, July 20 (Reuters) - Euro zone leaders must avoid a
Greek bailout package that goes back on their promise last month
to avoid a selective default, European Central Bank executive
board member Juergen Stark said in an interview released on
Wednesday.
"Our goal is that governments stick to what they decided,"
Stark said in an interview with German financial newspaper
Boersen-Zeitung, due for publication on Thursday when euro zone
leaders hold a crisis summit to stem market panic over Greece.
Stark said that a month ago, politicians had promised to
avoid any bailout that led to a 'selective default' on some of
Greece's sovereign debt, but that recent signs politicians may
be back-pedalling had caused market turmoil.
"It's a political yo-yo. This is precisely what is causing
uncertainty on the markets," he was quoted as saying.
Stark went on to add that in his view it was technically
possible to avoid a 'selective default', while still involving
private sector creditors in a Greek bailout.
However, he said there was a risk that markets may still
react badly.
"The ECB has kept on calling for an expansion of the mandate
of the EFSF (European Financial Stability Facility), so that it
can buy government bonds on the secondary market. But I will
also say that even so, it cannot be excluded that even this path
might be viewed as a credit event by market players."
(Reporting by David Milliken)
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Keywords: ECB/STARK