4 Jun 2015
Greece: Friday need not be a non-payment event – DB
FXStreet (Barcelona) - Economists at Deutsche Bank, share the key comments from yesterday’s Draghi’s speech on Greece and the case for the debt repayment this Friday.
Key Quotes
“With the negotiations live, Draghi was not able to make much comment. There was no indication of how near or far we are from an agreement. He said the ECB wants Greece to stay in the euro zone and said this required a “strong” agreement. What he means is an agreement that keeps all parties happy – sufficient growth, sustainable debt, adequate financing but also fairness. There was no elaboration of details, either on the precise content of such a “strong” agreement or on how the ECB might respond to a non-payment event.”
“He stressed the importance of the ECB rules on the treatment of collateral, but also mentioned that the rules for ELA are different than the rules on normal refi collateral.”
“Our view has been and remains that (1) the ECB has a lot of flexibility with ELA, but (2) there needs to be at least a staff level agreement if the ECB is to avoid a harsh reaction to a non-payment.”
“We remain of the opinion that this Friday need not be a non-payment event. Greece has the right to bundle payments and pay at the end of June.”
Key Quotes
“With the negotiations live, Draghi was not able to make much comment. There was no indication of how near or far we are from an agreement. He said the ECB wants Greece to stay in the euro zone and said this required a “strong” agreement. What he means is an agreement that keeps all parties happy – sufficient growth, sustainable debt, adequate financing but also fairness. There was no elaboration of details, either on the precise content of such a “strong” agreement or on how the ECB might respond to a non-payment event.”
“He stressed the importance of the ECB rules on the treatment of collateral, but also mentioned that the rules for ELA are different than the rules on normal refi collateral.”
“Our view has been and remains that (1) the ECB has a lot of flexibility with ELA, but (2) there needs to be at least a staff level agreement if the ECB is to avoid a harsh reaction to a non-payment.”
“We remain of the opinion that this Friday need not be a non-payment event. Greece has the right to bundle payments and pay at the end of June.”