Greece should quit euro unless "massive" funding given: Czech

Sun Jan 8, 2012 6:13pm EST

Czech Central Bank Bank Governor Miroslav Singer listens to journalists during an interview in the Czech National Bank headquarters in Prague July 8, 2010.   REUTERS/ Petr Josek

Czech Central Bank Bank Governor Miroslav Singer listens to journalists during an interview in the Czech National Bank headquarters in Prague July 8, 2010.

Credit: Reuters/ Petr Josek

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(Reuters) - Greece should leave the euro zone and devalue its new currency unless Europe is willing to provide "massive" funding for the indebted country, Czech central bank Governor Miroslav Singer said in a newspaper interview.

Singer told daily Hospodarske Noviny Europeans should focus on helping banks which may need recapitalisation and on issues that can be resolved, rather than devoting attention for years to Greece which represents just two percent of the European economy.

"If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the euro zone and a massive devaluation of the new Greek currency," he said in the interview to be published on Monday.

"So far Greece has been given loans that served mainly for buying time and for rich Greeks to move their money out of the country. This lowers the trustworthiness of Europe and the willingness of non-European countries to lend or provide new capital to the International Monetary Fund for helping Europe."

The Czech Republic is a European Union member but has no plans to adopt the euro in the near future. The country has maintained the ability to refinance its debt on the markets and the banking sector is well capitalised and protected by a domestic deposit base.

Asked about what Europe should do to avert the debt crisis, Singer said European politicians should acknowledge that banks may need more capital.

"We have to stop pretending that we will never recapitalise banks again," he said.

"In connection with the Greek crisis, it will possibly be necessary to pour money even into quite large banks which will suffer losses. It is necessary to immediately focus on banks' problems.

"This is however hitting awful obstacles in large European countries. There are politicians who said strong words - never, never never."

Singer criticised the Austrian central bank for publishing, without consultation, a plan in November to require its banks to cover new loans in central and eastern Europe with local deposits, although he said the plan will not impact lending in the Czech Republic.

Austrian banks are major players on the region's banking market.

"This was not a good way and we do not do such things, because we, myself included, consider it to be a sign of weakness, nervousness or error," he said.

(Reporting by Jan Lopatka; Editing by Matthew Jones)

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Comments (6)
Intriped wrote:
Finally a person with the courage to make this proposal. This the best direction the healthy part of Euro Zone countries can take and not try to tax there way into a short term solution by taxing the entire EU with a transaction tax etc.

Jan 08, 2012 8:02pm EST  --  Report as abuse
Bookdoc wrote:
What healthy European countries? If Germany and the few other solvent members try the scale of rescue necessary, their ratings will drop and the whole house of cards will fall. How long do you think France will keep their (undeserved) AAA? Once that drops, and they’ve had warning enough, they won’t be able to be part of the bailout. When Italy and Spain fall, the German courts won’t allow them to throw good money after bad. The misbegotten currency will be gone at that point.

Jan 08, 2012 10:44pm EST  --  Report as abuse
Nipsy wrote:
Blame Greece all you like but the fact remains that EU countries such as Germany kept on throwing us the money no questions asked. This means that we Greeks are worthy of every dime since they attacked our country during WW2 and since then we have had bad luck.

Germany should support Greece with compensation until eternity. I am a 45 year old on a pension for the last 10 years because I could not work in the olive fields in 38 degree days. That’s why we have the Albanians for.

Jan 09, 2012 12:46am EST  --  Report as abuse
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