Financial Regulatory Forum

EU asks Greece to explain derivatives reports

By Luke Baker and David Brunnstrom

BRUSSELS, Feb 15 (Reuters) – The European Union has asked Greece to explain reports that it engaged in derivatives trades with U.S. investment banks that may have allowed it to mask the size of its debt and deficit from EU authorities.

According to the New York Times, one contract in 2001 — carried out just as Greece was joining Europe’s monetary union — involved Greece selling forward future lottery receipts and airport landing fees in exchange for cash to write down debts.

The deal was treated as a currency trade rather than a loan, according to the newspaper, allowing Greece to hide it from public view while meeting EU deficit limits.

Greece’s finance minister, George Papaconstantinou, on Monday dismissed suggestions that his country may have played fast and loose with monetary rules, saying the transactions Greece took part in were permissible at the time.

“The kind of derivatives contracts reported by some newspapers were legal at that time,” he told reporters in Brussels. “Greece was not the only country to use them…They were made illegal; we have not used them since then.”

EU leaders reach deal to rescue Greece

By Marcin Grajewski and Jan Strupczewski

BRUSSELS, Feb 11 (Reuters) – European leaders have reached a deal to provide aid to Greece, EU president Herman Van Rompuy said on Thursday, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro.

“There is an agreement on the Greek situation. We will communicate now the agreement to the other leaders,” van Rompuy told reporters gathered at an EU leaders’ summit.

The agreement was forged in talks between Van Rompuy, European Commission President Jose Manuel Barroso, French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and Greek Prime Minister George Papandreou.

Euro zone holds intensive talks on Greek rescue

By Matthias Sobolewski and Renee Maltezou

BERLIN/ATHENS, Feb 10 (Reuters) – Euro zone countries held intensive talks on Wednesday on a possible rescue for Greece, whose debt crisis has shaken the entire currency union, as civil servants staged the first big strike against Athens’ austerity plans.

Financial markets gave Greece some respite as investors hoped that other European governments would help Athens to head off a possible default on its debt repayments.

Finance ministers of the 16 countries that share the common European currency scheduled a video conference for Wednesday to discuss the issue, a European Commission spokesman said.

European governments agree to help Greece – source

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By Matthias Sobolewski

BERLIN, Feb 9 (Reuters) – European governments have agreed in principle to help heavily indebted Greece, a senior German coalition source said on Tuesday, in what would be the first rescue of a euro zone member in the currency’s 11-year history.

“The decision on help for Greece has been taken in principle within the euro zone,” said a source in the German coalition government who has knowledge of the negotiations.

Various options were under consideration and no final decision had been taken but the most likely possibility was to offer “bilateral help,” the source said.

ECB says can’t bail out Greece, sees contagion risk

By Boris Groendahl and Terhi Kinnunen

VIENNA/HELSINKI, Feb 9 (Reuters) – Greece must get its own house in order itself as the European Central Bank cannot bail it out, two ECB policymakers reiterated on Tuesday.

“Greece, being a euro country, is under the regime of euro regulations, and so the main policy approach is of course that they have to solve the problems themselves,” ECB Governing Council member Ewald Nowotny said in an interview.

“The ECB have a clear mandate … we have a clear no-bailout clause,” Nowotny said in an interview with FT Alphaville, a blog published by the Financial Times newspaper.

Policymakers try to calm markets after euro sell-off

By Andrei Khalip

LISBON, Feb 5 (Reuters) – European policymakers scrambled on Friday to reassure markets about the stability of the 16-nation currency bloc as investors shed euro assets for a second day and Portugal backed a law that may push its swollen deficit higher.

European Central Bank Governing Council member Ewald Nowotny tried to play down a sharp fall in the euro, which hit its lowest level against the dollar since May 2009, and called talk of a euro zone breakup “absurd”.

Greek Prime Minister George Papandreou, on a visit to India, promised to “credibly apply” an austerity programme designed to bring his country’s yawning debt and deficit under control.

EU exec likely to sue Greece over statistics mess

By Jan Strupczewski

BRUSSELS, Jan 12 (Reuters) – The European Commission is likely to launch infringement proceedings against Greece for failing to provide reliable statistics on its budget deficit and debt, an EU source with knowledge of the proceedings said on Tuesday.

The Commission, the European Union’s executive arm, is responsible for upholding EU law. It had already once launched proceedings against Greece for unreliable deficit statistics in 2004, but closed them in 2007.

“There will probably be another infringement procedure… because providing timely and reliable statistics is an obligation under EU law and they have failed in their obligation,” the EU source said.

Greek bailout not under discussion, markets suffer

By Harry Papachristou and Anna Willard

ATHENS/PARIS, Dec 15 (Reuters) – Greece is not discussing a bailout with other European Union countries, Greek Finance Minister George Papaconstantinou said on Tuesday, when financial markets gave his emergency deficit-cutting plan a thumbs down.

Speaking following a meeting with his French counterpart in Paris, Papaconstantinou also said his country was doing everything necessary to reduce its public deficit.

“There is no question of a bailout. There is absolutely no question of a bailout and we are not discussing that with our (European) colleagues,” he told reporters.

ANALYSIS-After hardball, Greece gets EU solidarity pledges

EU High Representative for Foreign Affairs Catherine Ashton (L) poses with Greek Prime Minister George Papandreou during a European Union leaders summit in Brussels December 10, 2009.  REUTERS/Yves Herman By Brian Love, European Economics Correspondent

PARIS, Dec 11 (Reuters) – Reassuring noises from France and Germany suggest Greece can ultimately count on help from its euro zone partners if its debt problems get out of hand — though its partners were content to see financial markets scare Athens for a while.

As Greek bond spreads ballooned early this week, officials in major European Union governments indirectly fuelled the panic by refraining from making clear pledges of support for Greece.

Most of the officials’ public statements focused on urging Athens to face up to its problems and, like Ireland, take drastic steps such as public spending cuts to reduce its budget deficit and prevent its debt from becoming unserviceable.

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