PARIS (MNI) – The European Central Bank will not demand to be
treated differently from normal creditors in the case of debt
restructuring, according to ECB Executive Council member Benoit Coeure,
who ruled out future debt overhauls after that for Greece.

“The idea is that the ECB will not demand a privileged status if
debt restructuring is imposed,” Coeure told the French daily Les Echos
in an interview published Friday. “When we publish the decision
instituting our [sovereign bond] purchase program, we will detail this
point in the introduction.”

“We are aware that this principle reenforces the effectiveness of
our program because investors will no longer fear that they alone will
have to pay if a government has difficulties with its debt,” he said.

Coeure acknowledged that the ECB cannot finance governments
directly, “which means that it cannot voluntarily forego its claims on a
government. That does not prevent it from being constrained to accept
losses on debt it has purchased. In that case – which is hypothetical,
remember – the ECB will make a contribution in the same manner as
private investors.”

Coeure defended the ECB’s initial opposition to restructuring Greek
debt, since “this should not be part of the tools to manage public
finances. Debt write-offs are a way of avoiding necessary reforms. I am
convinced that there will not be other restructuring of public debt in
the Eurozone.”

There “will be an accord” on Greece’s bailout program, Coeure
predicted, noting the broad consensus in Europe for a two-year extension
for its debt targets, “which implies additional costs for creditors.”
What remains to do is “to finalize the financing conditions,” he said.

Coeure hinted that Greece may benefit as well from the distribution
of central bank profits to governments, which would have to decide
whether or not to transfer them to Greece. “It would be logical to do
this for profits from the (previous bond-buying program) SMP,” he
added, estimating that this would not amount to E12 billion once the
national central banks have made necessary provisions.

The central banker warned against “catastrophic” scenarios for the
Eurozone, predicting a “slow” recovery next year. He noted that the
ECB’s Governing Council decided last week that its monetary stance was
appropriate to assure price stability, but noted that “this does not
exclude any option for the future.”

–Paris newsroom +331 4271 5540; email: ssandelius@mni-news.com

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