Greece’s central banker said on Monday he supports establishing a precautionary credit line for the country after it exits its third adjustment program in the summer.
Speaking at an event organized by the Hellenic-Spanish Chamber of Commerce on the future of the Greek economy, Yannis Stournaras said that although the economy is recovering, the country has still some distance to cover until it achieves constant funding from the markets after the end of the program.
As he explained, the existence of such precautionary credit would be beneficial to the Greek economy, contributing to the de-escalation of borrowing costs, because it would provide Greece with security to finance its borrowing needs after the program ends in August 2018 — especially if the situation on international markets deteriorates.
At the same time it will enable the European Central Bank to continue to accept Greek bonds as collateral to provide liquidity to Greek banks, until they again acquire creditworthiness by the rating agencies.
The central banker also said that the institutions will have to clarify the type of supervision the country will have until it repays 75 percent of its loans, as well as the terms and conditions under which Greece’s partners are willing to provide a precautionary credit line.