European Central Bank President Mario Draghi urged Greece to work quickly toward an agreement with its creditors to curb a deepening financial crisis and quash doubts over its membership of the euro.
Even as he warned investors against dumping the single currency, Draghi said Prime Minister Alexis Tsipras’s government must do “much more work” to show it can satisfy the terms of its 240 billion-euro ($259 billion) bailout program.
“It’s urgent,” Draghi told reporters in Washington on Saturday during meetings of the International Monetary Fund. “We all want Greece to succeed. The answer is in the hands of the Greek government.”
Draghi made his call for action after Greek government bonds suffered their worst week since Tsipras’s January election. The government’s anti-austerity rhetoric is clashing with demands from its European peers to take more steps to revamp its debt-laden economy before they will release another tranche of aid.
At stake is Greece’s ability to avoid defaulting on its debts and stay in the 19-nation euro area. The brinkmanship overshadowed the Washington talks of global finance chiefs as delegates from outside of the euro area urged a speedy resolution.
“We have been clear in our conversations with all parties there is an urgent need to come together around a comprehensive approach,” U.S. Treasury Secretary Jacob J. Lew said Friday. “Time is of the essence” and “Greece has to take the lead.”
Euro-area finance ministers are next due to discuss progress on Greece at their meeting on April 24 in the Latvian capital of Riga. A deal is unlikely to be ready by then, Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in Washington on Friday.
For all the strains, Draghi cautioned investors not to bet against the 16-year-old single currency. “It’s pointless to go short on the euro,” he said. “Do it.”
He also said that Greek banks continue to meet the requirements for Emergency Liquidity Assistance, a financial lifeline the ECB decides on each week. The funding has so far helped avoid a financial meltdown as the wrangling over aid has gone on.
“ELA will continue to be given to the banks if they’re judged to be solvent and if they have adequate collateral which is the case now,” Draghi said.
The emergency aid flowing to the Greek banks will have to end eventually, said Governing Council member Christian Noyer. He said the aid is consistent with ECB rules and also not a substitute for long-term actions.
“Emergency assistance is by definition not meant to last indefinitely,” Noyer said. “There will have to be a solution to the fundamental problems. If deposits continue to drop, banks will find it difficult to get refinancing.”
In an interview in Washington, ECB Governing Council member Vitas Vasiliauskas said the central bank shouldn’t extend its assistance beyond the summer.
“The situation in Greece means that we should have a limit until summer for ELA,” Vasiliauskas said on Saturday. “Everyone understands what ELA means, it’s a temporary measure to give the banks liquidity.”
Greece is at the top of the agenda when euro area finance ministers meet on Friday. The European Union said Greek authorities are drawing up plans based on their initial list of reforms, which can unlock aid if it passes muster with the IMF, the ECB and the European Commission.
Talk of the Greek situation filled the corridors at the IMF’s spring meeting but “nothing has changed,” French Finance Minister Michel Sapin told reporters. “We’re in the same situation at the end of these meetings as at the beginning.”
Draghi said any package of Greek policies should focus on “growth, fairness, fiscal sustainability and financial stability.”
While Europe is better equipped to deal with any fallout in financial markets if Greek negotiations fail than it was when it first fell into crisis, he said the region is still in “uncharted waters.”