ECB's Kranjec says Greek debt reprogram likely

Reuters News
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Posted: Oct 10, 2011 4:29 PM
ECB's Kranjec says Greek debt reprogram likely

LJUBLJANA (Reuters) - Greece will not default, although its debts are likely to be reprogrammed, European Central Bank Governing Council member Marko Kranjec said in an interview on TV Slovenia on Monday, adding that the euro will survive.

"I'm sure that Greece will not go bankrupt, at least not in a sense that it would pull other countries down as well, but a reprogram is very likely and is already being debated," said Kranjec, who is also the governor of the Bank of Slovenia.

"The euro will survive," he added.

He also said that countries have to help their banks if necessary in order to help the economy.

"A bank is like a highway. If you do not have it, you cannot move with a car. If a bank does not have money, it cannot give loans to the economy."

But he added that the banking sector will have to shrink in the future.

"The banking system has expanded too much in the past, the financial system is too big ... the banking sector, the financial sector will have to shrink. There will be a lot of problems due to that in all economies of the developed countries," Kranjec said.

He also said that public finance policies will have to be harmonised in the euro zone countries to avoid similar crisis in the future.

(Reporting By Marja Novak; Editing by Kenneth Barry)