By John O’Donnell and Ilona Wissenbach
BRUSSELS, March 1 (Reuters) – Germany has taken steps to identify speculators in Greek debt to try to prevent them from profiting unduly from any bailout of the ailing euro zone economy, a source with direct knowledge of the matter told Reuters.
The probe by the country’s financial watchdog is part of delicate deliberations in Germany as to whether it should help bail out Greece, which is grappling with mounting debts.
“It would be bad if it were to emerge after a rescue that the money had gone into the pockets of speculators,” the source told Reuters.
“The result of the ‘Greek tragedy’ is that the political environment has become such that the Credit Default Swap (debt insurance) problem has come to the fore.”
The investigation by financial watchdog BaFin comes against a backdrop of concern over Greece’s ability to manage its finances, and sends a warning signal to speculators buying and selling insurance for Greek debt — a trading strategy that is legal but has been blamed for fuelling volatility.