HIGHLIGHTS-Juncker and Rehn on Greece, sovereign debt crisis

STRASBOURG, France, June 6 (Reuters) - European Economic Affairs Commissioner Olli Rehn and the chairman of the Eurogroup, Jean-Claude Juncker, answered questions before the European Parliament's economic committee on Monday.

Following are comments from the top two officials handling the region's sovereign debt crisis.

ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN

ON EFSF'S SHORTCOMINGS:

"You may recall that the Commission in January proposed to reinforce the effective lending capacity of the EFSF which will be done now, finally, the deal will be sealed in the June European Council or in the Ecofin of 20th of June.

"We also proposed to extend the scope of activities of the EFSF both concerning... an arrangement of a flexible credit line, which would be a very useful pre-emptive instrument, and to enable operations in the secondary market concerning government securities.

"Unfortunately, this part of our proposal did not fly, because the EFSF is based on a unanimity rule and therefore the EFSF cannot do operations in the secondary market, it can only do them in the primary market.

"I regret this, because this is a major limitation for the activity of the EFSF and therefore for containing the sovereign debt crisis for the sake of Europe."

ON EURO BONDS:

"I am ready to say that the (European) Commission is willing to study the option of eurobonds. This was tested a year ago in the (European) Council. That was not acceptable for a number of member states."

ON GREEK DEFAULT:

"In a country like Greece, which was in a freefall in fiscal terms, it was facing a default last April/May and unfortunately it is again facing a default unless there's help from its European and international partners.

"There is no other way than to ensure that fiscal policies are brought onto a sustainable path."

ON GREECE:

"We are in a very serious situation concerning especially Greece and its current critical juncture.

"Building on the agreed comprehensive consolidation package, discussions on financing modalities for Greece and its economic reforms and adjustments are now expected in the next few weeks, before the 20th of June."

EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER

ON DEATH THREATS

"I receive a lot of mail from Greece, not least death threats."

ON NEED TO DO EVERYTHING FOR GREECE:

"Everything should be done to, as it were, save that country (Greece). Intervention on secondary markets, I'm not going to say you're wrong, I'm not going to say I wouldn't have supported the idea, I supported the idea just as did others, but it wasn't supported by others. As a result it wasn't a realistic option."

ON NEED FOR GREEK CONSENSUS:

"In the case of countries with difficulties, it would be wise for the principle political forces of those countries to agree on the path to follow. That's what we did in Portugal. That's what happened in Ireland and that's what we would like to happen between the political parties in Greece.

"You do, after all, have to be concerned about your external image. I have a huge amount of sympathy for the Greek people but you can't really expect other people to help, other people to show solidarity if you can't sort yourselves out internally. This isn't a matter of party politics. It is about Greece."

ON EURO EXCHANGE RATES:

"There are colleagues in the European Council who think that the euro zone should have an exchange rate policy ... I'm more inclined to think that we should have an exchange rate policy because in a structurally globalised world an economic and monetary unit which doesn't even have a vision of an exchange rate policy isn't really in the long run going to have a satisfactory profile.

"There are other member states who are able to adapt to this exchange rate, which is objectively overvalued in comparison with other major reference currencies. Everything depends on how you structure an economy.

ON GREECE: "We will never achieve what we need unless there is consensus among the people. I am optimistic also about Greece.

"I don't think all the problems (in Greece) will be solved by privatisation.

"The exit of Greece from the euro zone was never, in any meeting of the Eurogroup or any kind of formation in which the Eurogroup met, it wasn't spoken about at all, the exit of our Greek friends from the euro zone was not discussed. It is for me a concept that is unacceptable."

ON DEBT RESTRUCTURING:

"In the past, Olli (Rehn) and myself have said there will not be a restructuring. We cannot go back on what we have said.

"We're working on a formula that will not lead to a negative judgment by the ratings agency and will not mean that the country is seen to be in default."

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For an interactive timeline on the Greek Debt crisis, click link.reuters.com/sas64n)