European Union officials may require Greece to provide collateral for aid as policy makers struggle to prevent the euro area’s first sovereign debt restructuring, said a person with direct knowledge of the situation.
Expanding the ¤110-billion ($158 billion) lifeline Greece received last year may mean that assets or revenue from asset sales are used to secure extra funds, the person said. Demanding collateral, an idea floated last year by Finland, may help avoid a political backlash against bailouts.
European Union finance officials, who held an unannounced meeting May 6 in Luxembourg, are preparing the help to ease a debt burden that some investors say will lead to a restructuring. Other steps may include lower interest rates or longer maturities on bailout loans, said Norbert Barthle, budget spokesman for German Chancellor Angela Merkel’s ruling party.
“We’ll just have to bite the bullet,” Barthle said in an interview yesterday from his district in the state of Baden- Wuerttemberg. “We need to help Greece help itself. What’s the alternative? We don’t want to be pushed over the edge into restructuring.”
Trichet signals no rate rise
The euro fell the most in four months against the dollar after European Central Bank (ECB) President Jean-Claude Trichet signaled he may not raise interest rates next month and concern grew that Greece’s debt crisis is worsening.
The shared currency tumbled yesterday by the most in a year after Germany’s Spiegel magazine said Greece may withdraw from the euro. European Union ministers attending talks in Luxembourg later denied Greece would leave the currency and said it may receive more aid.
