Mario Draghi, President of the ECB (European Central Bank), urged Greece to remain a member of the 17 member eurozone countries. He actually admitted that Greece’s political turmoil may and can lead to its exit from the currency bloc.
During his speech, honoring departing ECB board member Jose Manuel Gonzalez-Paramo, Draghi said, “Our strong preference is that Greece will continue to stay in the euro area.”
He declared that whether Greece will stay or go isn’t exactly up to ECB to decide, simply because its founding treaty “does not foresee anything on an exit.” He stressed the fact that the ECB is mainly focused on the anti-inflation mandate and “preserving the integrity of our balance sheet,” suggesting that the ECB won’t go out of its way to prop up Athens.
Draghi made it clear that Greece’s future in the eurozone lies (literally) at the hands of Greek voters, who will go to the polls again next month, in a second attempt to form a government.
Despite everything being said and done, the ECB is actually increasing the pressure on Greek authorities to carry out a recapitalization of the banking system, since most of its equity was wiped out by the restructuring of Greece’s privately held debt earlier this year.
Once Greek banks are recapitalized, they should be able to access the ECB’s normal operations again; that’s according to the ECB.
This statement was issued at the end of a very difficult day of speculation and rumors over an increasingly fragile financial situation in Greece.