ECB holds rates, refuses to show hand on Greece

Thu Feb 9, 2012 9:20am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Eva Kuehnen

FRANKFURT (Reuters) - The European Central Bank held interest rates at a record low on Thursday, seeing tentative signs of economic stabilization, but refused to say what part it might play in averting a ruinous Greek default.

After days of delay, Greek political leaders clinched a deal on austerity measures needed to secure a bailout to keep the country afloat.

ECB President Mario Draghi said Greek Prime Minister Lucas Papademos had confirmed to him that the Greek parties had endorsed a deal, as demanded by their European Union and International Monetary Fund lenders, after days of delay.

"A few minutes ago I got a call from the prime minister of Greece saying that an agreement has been reached and has been endorsed by the major parties," Draghi told a news conference after the ECB left its main interest rate on hold at 1.0 percent.

"I'm sorry to say I cannot say anything about how our holdings of Greek bonds ... will be treated," he said.

Draghi will attend a meeting of euro zone finance ministers later on Thursday to discuss a 130 billion euros Greek bailout.

Athens has urged the ECB to hand back profits on its Greek bond holdings, a move which could raise 12 billion euros or more to help fill a gap in its financing needs. As of Wednesday, the ECB's 23-member Governing Council had yet to agree a position.

While the ECB has ruled out joining private creditors in voluntarily accepting a reduction in Greek bonds' value, it could send Athens, via a roundabout route, the profits from bonds it bought at below face value.   Continued...