Nowotny Says ECB Is Banned From Forgiving Greek Debt

The European Central Bank is banned from taking part in a Greek debt restructuring because it would be tantamount to printing money to finance governments, Governing Council member Ewald Nowotny said.

“For the ECB, forgiving debt isn’t possible because it would be equivalent to indirect state financing,” Nowotny told journalists in Vienna today. “Therefore, the ECB certainly can’t participate in a such actions of the public sector.”

Germany’s Der Spiegel magazine reported yesterday that Greece’s international creditors propose a so-called haircut in their latest report on the country’s finances. German Finance Minister Wolfgang Schaeuble rejected such a debt restructuring, saying it’s unrealistic to expect public or private bondholders to take further losses on their Greek holdings.

The ECB holds about 45 billion euros ($58 billion) of Greek government bonds purchased as part of the now terminated Securities Markets Program, according to data compiled by Bloomberg.

To contact the reporter on this story: Boris Groendahl in Vienna at

To contact the editor responsible for this story: Frank Connelly at

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