G7 reassures on Greek debt conundrum

City A.M. Reporter
REASSURANCES about debt-strapped Greece and agreement that banks should pay for future rescue funds capped an international meeting in Canada’s Arctic, as European policymakers sought to convince jittery markets that they have things under control.

Ministers and central bank governors said economies were recovering from recession but stuck to their view that it was too early to withdraw government help.

In a statement issued this weekend after two days of talks by the Group of Seven rich industrialised countries, European Central Bank president Jean-Claude Trichet said he believed Greece would meet tough new targets to rein in its budget gap. “We expect and we are confident that the Greek government will take all the decisions that will permit it to reach that goal,” he said.

French finance minister Christine Lagarde said eurozone countries would make sure the Greek plan was implemented and Jean-Claude Juncker, chairman of the group of euro zone finance ministers, dismissed the idea Greece would need money from the IMF.

Not everyone was convinced it would be that easy, however, given that Greece’s problems already have driven down debt prices of other high-deficit European countries. World stock markets slumped to three-month lows on Friday on fear that the crisis would spread and the euro fell to its lowest level against the dollar in eight months. “I don’t think Trichet’s comments will help ease concerns about the eurozone,” said GFT’s Boris Schlossberg.