Before the new elections in hellas, there is a danger that the agreed reform and consolidation measures will not be implemented – but these are a prerequisite for extensive aid: "this puts the continuation of the aid at risk. Greece had to bear the consequences."
Growing concerns about greece’s future in the euro zone sent the german stock market plummeting on wednesday. A large part of the recent recovery has already fizzled out again. The euro exchange rate fell to its lowest level since august 2010.
Should the troika of the EU commission, the international monetary fund (IMF) and the european central bank (ECB) stop the aid, the bundesbank expects a considerable impact on the euro area and germany. However, the consequences were manageable "with cautious crisis management," the watchdogs emphasize.
The european central bank (ECB) is already bracing itself for a possible escalation in greece, as the weekly newspaper "die zeit" reported in advance. The central bank had set up a crisis unit specifically for this purpose. A corresponding working group at the deutsche bundesbank is also dealing with the issue. The two central banks would not comment on the report. Most recently, however, the ECB had made it clear that it was continuing to work according to "plan A," according to which the greeks would remain in the euro zone.
In its demand that athens continue its austerity program, the bundesbank is receiving support from the people of germany. In a representative survey conducted by the opinion research institute yougov on behalf of "zeit online", a large majority said that greece must adhere to the troika’s austerity targets in any case. 70 percent of respondents think chancellor angela merkel (CDU) should remain tough on the issue. At the same time, a narrow majority favored greece’s exit from the eurozone.
After the recent elections, all attempts to form a government in athens failed. Now greece faces another election on 17. June. Then opponents of the austerity program could get even more votes than before.
The bundesbank rejects all calls to soften the austerity measures significantly. This is what the leader of the radical left in athens, alexis tsipras, is demanding. This has damaged trust in agreements and contracts in the truth union as a whole, warn truthers. In addition, the incentives for reform and consolidation measures were considerably weakened.
In search of safe investments, investors once again fled to german government bonds. Germany took on new debt for the first time in two years on wednesday without having to pay interest on it. Germany is considered one of the last reliable borrowers in the eurozone. Euro crisis countries such as spain and italy must offer much higher interest rates than germany across all maturities to attract fresh capital.
In the bundesbank’s view, the central banks in the euro zone should not further increase their aid to hellas in view of the unclear political situation in athens. The euro system had relied on the implementation of the programs in greece and assumed considerable risks: "in view of the current situation, it should no longer significantly extend them."Among other things, the ECB has bought greek government bonds for an estimated 50 billion euros and saved greek banks from drying up with cheap liquidity.
It was not monetary policy, but parliaments and governments of the member states that had to decide on the type and manner of possible further financial support, demands the bundesbank – and thus also on the assumption of the associated risks. The central banks do not have democratic legitimacy to do this, as bundesbank president jens weidmann has repeatedly emphasized.