European Central Bank President Mario Draghi said it’s up to the Greek government to take the next step to break the deadlock in talks with creditors and secure a deal on its bailout.
“While all actors will now need to go the extra mile, the ball lies squarely in the camp of the Greek government to take the necessary steps,” Draghi said at a hearing of the European Parliament’s Committee on Economic and Monetary Affairs in Brussels on Monday. Europe needs a “strong and comprehensive agreement, and we need this very soon.”
As Greece and its creditors harden their positions over a bailout deal without which the Mediterranean country will likely default, the ECB holds the survival of the domestic banking system in its hands. Negotiations to find a way to unlock funds failed after just 45 minutes on Sunday, leaving the nation closer to a deeper crisis.
Officials are set to discuss liquidity aid and collateral rules for Greek emergency lending this week, before the euro region’s finance ministers meet on Thursday.
“I can assure you the ECB is doing all it can to facilitate a successful outcome,” Draghi said. “Liquidity will continue to be extended as long as Greek banks continue to be solvent.”
European stocks slid and the euro declined on Monday after the weekend talks between Greece and its creditors collapsed. The yield on Greek 10-year debt was up almost one percentage point at 12.72 percent at 4:05 p.m. Frankfurt time. Greek Prime Minister Alexis Tsipras said that he’s waiting “patiently” for the country’s creditors to “move toward realism,” signaling a hardening of his stance.
The ECB is currently providing around 118 billion euros in total central-bank support to Greece, around two thirds of the size of Greece’s economy, Draghi said. At the same time, the ECB could either ease conditions for Greece or tighten them depending on the outcome of the negotiations. The ECB has, in practice, the ability to allow the Greek government to issue more short-term debt to cover its liquidity needs.
“The situation is in evolution,” he said. “For the Governing Council to reconsider the T-bill ceiling, there should be a credible perspective for a successful conclusion of the current review and subsequent implementation, which would imply the disbursement of program funds by euro-area member states.”
He said it should be “absolutely clear that the decision on whether to conclude the review of the current program and disburse further financial support to Greece lies entirely with the Eurogroup.”
Draghi also indicated the ECB won’t be swayed from its plan to continue its 1.1 trillion-euro ($1.2 trillion) quantitative-easing program until at least September next year. The central bank aims to push inflation in the 19-nation euro area back toward its target of just under 2 percent.
“It is our clear intention to purchase public and private assets of 60 billion euros a month until September 2016,” he said. “We remain prudently confident that all economic and monetary conditions are in place to support a gradual reflation of the euro-area economy.”