Greece to ease capital controls soon, needs debt measures: Stournaras

Thu Nov 10, 2016 5:41am EST
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By George Georgiopoulos and Balazs Koranyi

ATHENS (Reuters) - Greece will soon ease capital controls further but full liberalization will depend on progress in easing the country's debt burden, which is also a precondition for entering the ECB's asset buying scheme, central bank chief Yannis Stournaras said.

Propped up by three successive bailouts, Greece hopes to emerge from a long recession next year. But much of its outlook depends on getting a long-sought reduction of its huge debt pile, easing capital restrictions and inclusion in the ECB's 1.74 trillion asset buying scheme.

"We gradually lift capital controls and the next step will take place soon," Stournaras, a European Central Bank Governing Council member, told Reuters in an interview. "The full lifting of capital controls is the end of the road."

"To get there we need the finishing off of the second (bailout program) evaluation, discussion on debt measures and quantitative easing inclusion. Above everything else, it depends on how quickly full confidence returns."

Stournaras expects the government to quickly conclude the second bailout review, opening the way for talks on debt possibly in December, setting the stage for the ECB to include Greece in its quantitative easing asset purchase scheme.

Debt relief has been one of the key sticking points. Germany opposes a move now, while the ECB and the IMF are both calling for an easing of the burden, possibly through longer maturities, lower rates on some bonds, and a smoother repayment schedule.

Stournaras made it clear that unless a serious discussion starts on debt, Greece will not be included in the ECB's sovereign bond-buying program. Inclusion could give the recovery a major boost.

"QE depends on debt being sustainable. The ECB needs to have something concrete on debt measures before it performs its own debt sustainability analysis," Stournaras said.   Continued...

Governor of the Central Bank of Greece Yannis Stournaras presents the new 20 Euro banknote at the institution's Museum in Athens, Greece, November 24, 2015.   REUTERS/Alkis Konstantinidis