Top IMF official Poul Thomsen, an “old hand” in no less than three Greek bailouts, on Thursday confirmed a looming compromise with European institutions over the Fund’s demands for a stepped up and in-depth assessment of Greece’s systemic banks before the third memorandum ends in August 2018.
Thomsen, the director of the IMF’s European department and the Fund’s former chief auditor for the Greek program, was quoted at a FT summit in London as saying that “…we see no financial stability concerns at all in Greece” – in a statement regarding the domestic banking system.
“The issue is that we need to be sure that there is a strategy to deal with Greece’s exceptionally high level of non-performing loans over the medium term,” he added, before outlining the compromise, a development more-or-less announced by ECB President Mario Draghi and Eurogroup chairman Jeroen Dijsselbloem this week.
“In this regard, we had suggested to update the 2015 asset quality review (AQR) by next spring. The European Central Bank (ECB) has instead proposed bringing forward the already scheduled stress tests and undertaking targeted asset reviews, suggesting that this will allow us to gather the information necessary to assess whether the current strategy for ensuring the soundness of the banking system is adequate, without having to go through a full asset quality review (AQR). We think that this is a constructive proposal that achieves the same broad objectives, and we are now discussing the exact modalities with our colleagues at the ECB,” Thomsen said.
