German central banker attacks Greek funding

 
Tim Wallace
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THE GREEK government is being given unfair access to European finance via emergency bank funding, the Bundesbank’s chief said yesterday, taking a tough line on the peripheral state.

Jens Weidmann told German newspaper Handelsblatt the set-up strains European Central Bank rules.

“Given the ban on monetary financing of states, I don’t think it is OK that banks which don’t have access to the markets are being granted loans which then finance the bonds of their government, which doesn’t have access to the markets itself,” he said.

Greek lenders have been given increasing support from the central bank in recent weeks.

It came as the Greek government offered to privatise its biggest port, in a concession to the EU and International Monetary Fund, which want the troubled economy to undertake reforms to boost its competitiveness.

The Greek government managed to pay its latest €750m (£542m) debt repayment to the International Monetary Fund this week, but only by borrowing from another facility with the institution.

However, its 10 year borrowing costs have dipped by almost half a percentage point in recent days.

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