ECB's Constancio open to Vienna-style Greek deal
FRANKFURT, June 15 | Wed Jun 15, 2011 11:09am EDT
FRANKFURT, June 15 (Reuters) - The European Central Bank could accept private sector involvement along the lines of the "Vienna Initiative" to address the Greek debt crisis, ECB Vice President Vitor Constancio said on Wednesday. Under the "Vienna Initiative" for central and eastern Europe, international lenders agreed in 2009 to boost credit to the region and the main commercial banks in turn committed to maintain exposure and roll over credit lines. "We are not against all forms of PSI (private sector involvement) ... some sort of Vienna-type sort of initiative could be conceived -- several of us have said. But no more than that," he told a news conference after presenting an ECB report on financial stability.
"It would have to be clearly voluntary in such a way that it would not be qualified as either a credit event or a rating event," he added.
Constancio said that under a rating event, rating agencies would classify Greek debt at "selective default".
Asked what
Greece would need to do for securitised privatisation revenues to be accepted as collateral by the ECB, Constancio told Reuters Insider television: "They would have to have a sufficient rating."
"But I didn't hear about any concrete proposals in that respect so far," he added. "It's something that, as far as I know, is not on the table now."
ECB President Jean-Claude Trichet last week endorsed privatisation as a way to help Greece out of its debt crisis, saying he was sometimes surprised by the narrow view of the debate on Greece.
Constancio also said that while there was some risk of contagion to other countries, markets had put a clear marker between the three countries with EU/IMF aid packages -- Greece,
Ireland and Portugal -- and the rest.
"There is a very clear-cut distinction between the three countries and all the others," he said.
This year's European bank stress tests present a more severe scenario than last year's, he told Reuters Insider, adding: "I hope this is an opportunity to dispel any remaining doubts about some segments or institutions."
Turning to the United States, Constancio dismissed the idea of the country defaulting, were it a mini-default or otherwise.
"I think that a default of any size is not being anticipated ... regarding the United States," he said.