The negotiations between Greece and its creditors on the terms of new aid loans are coming under increasing time pressure. Neither the numerous crisis talks on the edge of the G7 finance ministers meeting in Dresden nor the current negotiations between the creditor institutions from the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission with Athens have yielded significant progress in the past few days. The utility of the euro countries running from the end of June.
Federal Finance Minister Wolfgang Schäuble (CDU) said on Friday reflected by the meeting of finance ministers and central bank governors of the seven most industrialized countries in Dresden, the optimistic statements of Greek government politician “is not yet fully in the discussions of the Greek Government with donors resist”. Officially was not the issue in Dresden on the agenda. Schäuble said they had advised a few minutes about it. At the meeting, warned the deputy head of the Federal Reserve, Stanley Fischer, against hasty decisions.
The US Treasury Secretary Jack Lew demanded, however, a “pragmatic solution” of the Greek debt crisis. Among the G7 countries it was agreed that the government must make hard decisions in Athens. It lies in the human nature that this is often done only “shortly before the deadline.” In the negotiations, but is necessary flexibility, all sides must move. It is not in the interest of the global economy, if it came to a crisis by a Greek exit from the euro zone. Given the faltering negotiations with Athens, Chancellor Angela Merkel (CDU) and French President Francois Hollande has again phoned the Greek Prime Minister Alexis Tsipras. Government spokesman Steffen Seibert said in Berlin, Merkel and Hollande had Tsipras offered, “to be helpful, so that we manage to keep Greece in the euro zone”.
The Brussels negotiations on Greek reforms falter meanwhile. The euro financial secretaries made the Greek representative clear that Athens by the end of next week must submit binding commitments under the reform. Otherwise, could the threatened with state bankruptcy country no longer receive money from the current utility. This time frame due to the fact that the competent bodies of the IMF and the euro countries as well as some national parliaments would approve a disbursement of loans. Main points of contention are the required pension reform, which from the perspective of funders inadequate measures on the labor market as well as the insufficient efforts in privatization.
The financial situation of the country is meanwhile increasingly threatening: The economy slipped in the first quarter back into recession. From their bank deposits citizens moved in April from so much money that the Greek Institute show with 139.4 billion euros, the lowest deposit for more than a decade. In order to prevent an acute debt default, is comfortable talking to bundle incurred in June and interest repayments to the IMF and only serve notice end of the month. This would mean that a Athens in principle due in the coming week repayment of 300 million euros is not already in the coming week, but – would have to repay about two weeks later – along with a further tranche. For this, however, an application would be necessary to Greece has not yet asked.
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Schäuble called as an important outcome of the Dresden meeting that the G7 wanted to explore an international code of conduct for bankers to drive the cultural change in the industry after the 2008 financial crisis. According to Bundesbank President Jens Weidmann, Germany is that banks have to secure government bonds with equity in the balance sheet in future. The crisis has shown that the risk is not zero.
Weidmann warned also of the consequences of the low interest rate policy of the central banks, which could lead to excesses in the financial markets. By the will of the G7, the 20 leading industrialized and emerging countries (G20) by the end of its package of measures against tax tricks and transfer of profits of international corporations (BEPS) will bring finally on the way. (New liquidity squeeze, page 18)
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