Bundesbank President Jens Weidmann said a haircut for Greece would not resolve the country’s debt problems and could in fact be “dangerous” if it led to a relaxation in debt-cutting efforts.
“A haircut is not an cure-all,” Weidmann told Sunday’s Bild am Sonntag newspaper. “If it were to lead to a reduction in the readiness to implement structural reforms, it could even be dangerous.”
European Union leaders hold talks on Sunday to hammer out a comprehensive plan for tackling the euro zone debt crisis.
Weidmann warned against letting highly indebted countries off the hook.
“The basis for confidence in government bonds is that states can service their debts,” he said.
“We cannot allow states with debts to have an easy way out of the problems they created for themselves. That would be an invitation to others to be copycats and the crisis of confidence would only grow.”
Weidmann said he was, however, not in principle opposed to helping out highly indebted nations.
“In a crisis like this I consider it to be right to help countries and buy them time if they take on their problems with determination and resolution,” he said. “They have got to get their state budgets in order and improve their competitiveness. Greece has to implement the adjustment programme already agreed.”
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