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BoG Gov. Stournaras reiterates need for ‘precautionary credit line’ after current bailout ends

Bank of Greece (BoG) Gov. Yannis Stournaras has reiterated his standing support for a precautionary credit line to be extended to thrice-bailed out Greece after August 2018, when the current and third consecutive memorandum program officially ends.

Stournaras, a former finance minister in Samaras coalition government prior to 2015, again underlined that such a credit line will help Greece successfully return to the sovereign borrowing markets, regardless of whether even one euro in lending is accessed from the credit line.

The very high-profile Greek central banker’s support for the post-bailout credit line clashes directly with the current leftist-rightist coalition government’s insistence on a “clean exit” from the memorandum era, without any “lifeline” extended by institutional creditors. The Tsipras government argues that such a finance tool would mean more conditions being placed by creditors, and essentially comprise a “3.1” memorandum.

At the same time, the utterly poll-trailing government has based much of its communications strategy over the recent period in persuading its grass roots supporters that austerity policies are over and that the economy is on an upwards course.

In comments published by Japan’s Nikkei newspaper, Stournaras also warned that a precautionary credit line is imperative in maintaining the ECB’s acceptance of Greek bonds as guarantees for refinancing of Greece’s systemic banks

He also said that bonds issued by countries of the European south are characterized by high volatility, following recent developments in Italy.