Eurozone finance ministers gathered in Luxembourg on Monday to discuss ways to leverage the European Financial Stability Facility and also to put pressure on Greece to implement additional financial reforms to try to jumpstart its shrinking economy.
Reuters reported that, according to the ministers from the 17-nation eurozone, Greece failed to meet its financial targets because it failed to effectively implement the measures it passed to meet requirements for another bailout loan. Athens says instead that its contracting economy is responsible for its failure to meet goals set by the International Monetary Fund, European Central Bank, and European Commission, jointly known as the troika.
The report quoted one official saying, “We will be pressing the Greek finance minister to do some more tough talking about the implementation of reforms at home. Greece would be well advised not only to announce, but also to implement reforms.” The group is not expected to approve the second tranche of rescue financing for Athens at this meeting, although that was originally planned; instead, that vote has been postponed till the Oct. 13 meeting.
Greece is by no means the only topic of conversation on the schedule. Also of concern is the need to bolster the stability facility by more than the increase in its funding without also increasing the guarantees that underwrite the funding. The U.S. has suggested the use of leveraging, which has met with some opposition among eurozone members, who fear higher liabilities or the potential for credit rating downgrades.
Officials have said they will only discuss options that do not offer the potential for downgrades, and the previously cited official said, “The ministers on Monday will come closer to a solution, but not to a conclusion.”
Another item to be decided is the replacement for Juergen Stark, who resigned from the executive board of the central bank, as previously reported by AdvisorOne. While he said his resignation was due to personal reasons, it is believed that it was instead over the possibility of joint eurozone bonds, an idea that has been bandied about numerous times despite stiff opposition.