FRANKFURT — Amid growing expectations that Greece will have to restructure its debt, the German finance minister, Wolfgang Schäuble, warned Thursday that a default could have grave and unpredictable consequences.
Add to Portfolio
Go to your Portfolio »
Enlarge This Image
Thomas Peter/Reuters
Wolfgang Schäuble, German finance minister, seemed willing to give Greece more time.
But Mr. Schäuble’s comments left room for a less radical solution in which Greece might be given more time to pay its debts.
“There is no experience with what happens when a country inside a currency union becomes insolvent,” Mr. Schäuble said in an interview published Thursday in the German newspaper Handelsblatt.
European leaders have begun to discuss openly the possibility of extending the payback period for Greek debt, despite fierce opposition to that idea from the European Central Bank. Mr. Schäuble’s comments were interpreted by some as a sign that he had moved closer to the central bank’s view.
“We believe that today’s interview is key for markets in that it shows that politicians in charge of the matter in Germany, namely Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble, remain opposed to a rescheduling for the time being,” analysts at Barclays Capital wrote in a note.
But a Finance Ministry official, who was not authorized to speak publicly, said that Mr. Schäuble stood by comments he made days earlier, in which he appeared to entertain stretching Greece’s bond payments.
In an interview published Sunday in the German daily Bild, Mr. Schäuble said an extension of Greek debt payments would be possible only if it could be done without causing private investors to withdraw their money from the country.
Mr. Schäuble and other European leaders have grown impatient with the pace of Greek efforts to sell state assets, improve tax collection and make the economy more competitive. They are trying to maintain pressure on Greek leaders, while acknowledging that they may have to deal with the possibility that Greece cannot meet all its obligations.
In an interview published this week by Der Spiegel, the German magazine, Prime Minister Jean-Claude Juncker of Luxembourg, who oversees regular gatherings of euro zone finance and economic ministers, said that a so-called soft restructuring might be considered, but only after Greece had completed a tough overhaul.
“It would be the last step in a very long process,” Mr. Juncker said.
On Thursday, he warned that Greece might not meet requirements to receive the next installment of aid from the International Monetary Fund, Bloomberg News reported. His comments were interpreted as further pressure on Greece to act more boldly.
“I’m skeptical about Greece,” Otmar Issing, a former member of the European Central Bank’s executive board, said on Thursday, according to Bloomberg News. “Greece is not just illiquid, it’s insolvent.”
Peter Bofinger, an economist who advises the German government, said on Wednesday in Hamburg that Greece’s creditors would need to accept a 40 percent cut in the value of the country’s bonds, and swap them for bonds issued jointly by euro zone members.
One idea that has been gaining favor among economics specialists is a pact in which holders of Greek bonds would agree to be paid back more slowly to avoid greater losses if Greece defaulted. Such an agreement would be complicated but possible, legal specialists say.
The European Central Bank, which is the largest holder of Greek debt, has refused to consider such solutions.
