The head of the European Central Bank called on eurozone leaders yesterday to speak with one voice in the debt crisis, while defending German Chancellor Angela Merkel against accusations of foot-dragging.
“There is an absolute need to improve ‘verbal discipline’,” Jean-Claude Trichet said in an interview with the Financial Times Deutschland, a transcript of which was released by the ECB.
“The governments need to speak with one voice on such complex and sensitive issues as the crisis,” he said, while acknowledging that having 17 different governments made things “complex.”
He said: “But speaking with one voice in a period of crisis is of (the) essence.”
The Frenchman also defended Mrs Merkel against criticism that she, as the leader of Europe’s biggest economy, had acted too slowly throughout the eurozone’s sovereign debt crisis and had made matters worse.
“Not in the least,” Mr Trichet said. “I would see a discussion of this kind as being completely misplaced in the current situation.”
Mrs Merkel had said on Sunday that she would attend a summit of eurozone leaders in Brussels on Thursday (announced by EU President Herman Van Rompuy) to agree on a new Greek rescue package only if there were a prospect of a concrete deal.
Mr Trichet also expressed confidence that the eurozone would overcome the current crisis, which has dragged Greece, Ireland and Portugal into bailouts and which markets speculate could pull down Spain and Italy.
“Naturally the Europeans can manage the issue. It is not a question of technique. It is a question of will and determination,” Mr Trichet said. “The countries of Europe have always demonstrated that they pull together when the challenges are very high.”
Mr Trichet also sounded a warning that any default on Greek sovereign debt as part of a second rescue package for Athens would mean that the ECB would not accept the country’s bonds as collateral for loans.
Greek banks are heavily reliant on funding from the ECB and offer government bonds they own as collateral.
There are concerns that any restructuring of Greek debt being discussed by eurozone leaders, either through a debt rollover, swapping Greek bonds for new ones or a bond buy-back, could be seen rating agencies as a default.
“The governments have been warned,” Mr Trichet said, that “if a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral”.