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June 16, 2011 at 09:14 AM
The bailout fund created last year by the European Union (EU) and the International Monetary Fund (IMF) must double, to 1.5 trillion euros ($2.15 trillion), if politicians want the private sector to take part in a second Greek bailout package, according to a governing council member at the European Central Bank (ECB).
Reuters reported that, in the Dutch newspaper Het Financieele Dagblad on Thursday, Nout Wellink asserted that such an action was necessary if the private sector were to participate in rescuing Greece because there were so many uncertainties involved in the inclusion of private bondholders, and the risks could ensnare Ireland and Portugal.
Wellink, who is also the outgoing president of the Dutch central bank, said in the report, "If you take these risks, you need to build a safety net. If it goes wrong, you've got a lot to answer for. If ratings agencies see a rollover [of Greek debt] as a partial default, contagion to other peripheral euro zone countries will occur."
Wellink also said that private investors should be prepared to take action; in the report he said, referring to the ECB's purchase of state bonds, "people should also be prepared to do things the ECB has previously done."
