HELSINKI Jan 31 A deal on extending Greece's
bailout deal must be found by the end of February or the
European Central Bank will not be able to continue lending to
its banks, ECB council member Erkki Liikanen said on Saturday.
Europe's bailout programme for Greece, part of a
240-billion-euro ($270 billion) rescue package along with the
International Monetary Fund, expires on Feb. 28 and a failure to
renew it could leave Athens unable to meet its financing needs
and cut its banks off from ECB liquidity support.
Greece's new leftist government, which aims to ease the
strict terms of the bailout that have imposed harsh austerity,
opened talks with European partners on Friday by flatly refusing
to extend the current programme or to cooperate with the
international inspectors overseeing it.
"We (ECB) have our own legislation and we will act according
to that... Now, Greece's programme extension will expire in the
end of February so some kind of solution must be found,
otherwise we can't continue lending," Liikanen, also the
governor of Finland's central bank, told public broadcaster YLE.
"I don't believe that one can hide from the realities in the
economy," he said in an interview.
Asked about the possibility of a Greek debt haircut,
Liikanen said: "A significant debt restructuring has been
carried out with private investors. The ECB cannot fund a state
directly, which is what it would mean in this case."
(Reporting by Jussi Rosendahl; Editing by Mark Heinrich)