European Central Bank President Jean-Claude Trichet reiterated that the bank would not accept Greek government bonds as collateral, in the event of a default.
In an interview to the Financial Times Deutschland on Monday, the central bank chief said the responsibility for actions such as debt rollover or partial debt buyback, which could result in a default, lies with the governments.
"If a country defaults, we can no longer accept as normal eligible collateral defaulted bonds issued by the government of that country," Trichet said, according to a transcript of the interview published by the central bank. "Because, in the eyes of the Governing Council, this would impair our ability to be an anchor of confidence and stability."
Trichet said the governments would then have to step in themselves to put things right. Reiterating the bank's strong warning against a selective default, he said the governments would have to take care that the Eurosystem is presented collateral that it could accept.
Germany has long been insisting on voluntary involvement of private creditors in the next Greek rescue, thus relieving taxpayers in other countries. The ECB is against private sector involvement.
"All over the world, the best private sector involvement is foreign direct investments, privatization and going back as soon as possible to spontaneous market financing," Trichet said.
Trichet's comments come days ahead of a summit called in Brussels to deal with the financial stability of the euro area and the future financing of the Greek program. European Council president Herman Van Rompuy has convened a meeting of the Eurozone Heads of State or Government in Brussels on Thursday.
Asked about the crisis management efforts of the governments, the ECB head pointed out that speaking with one voice in a period of crisis is of essence. There is an absolute need to improve "verbal discipline", he said. Trichet also dismissed the criticism that German Chancellor Angela Merkel has acted too slowly, saying such a discussion is completely misplaced in the current situation.
The July 11 meeting of Eurozone finance ministers failed to make any headway in evolving a new rescue package for Greece. However, they agreed to adopt new measures to strengthen euro area's resistance to contagion risk from debt problems in Greece.
Eurogroup's new measures included enhancing the flexibility and the scope of the European Financial Stability Facility, lengthening the maturities of the loans and lowering the interest rates, including through a collateral arrangement where appropriate.
During the meeting, the ministers tasked the Eurogroup Working Group to propose measures to reinforce the current policy response to the crisis in Greece. This strategy is expected to provide the basis for an agreement on financing a second adjustment program for Greece.
Meanwhile, Deputy Director of the International Monetary Fund's European Department and the Mission Chief to Greece, Poul Thomsen denied there is a request for a new bailout program and said there has been no discussion of Greece exiting the Eurozone.
"There is no request for a new program. We have a program there. There is considerable undisbursed IMF money under that program," he told reporters on Friday. The official noted that Greece's debts are sustainable but on a "knife-edge."
Citing the absence of a new, fully-funded and credible EU-IMF program, coupled with heightened uncertainty surrounding the role of private creditors in any future funding as well as the country's weakening macroeconomic outlook, Fitch Ratings last week downgraded Greece's credit ratings by three notches to junk.
Standard & Poor's has warned that Greece's debt rollover plan could shift the ratings into "selective default." According to S&P, the two financing options described in the Federation Bancaire Francaise proposal would likely amount to a default under its criteria. On June 14, S&P downgraded Greece's ratings to 'CCC' with negative outlook, citing possibility of one or more defaults over the coming 12 months.
Amid heightened concerns over debt contagion risk to some of the core Eurozone economies, the Italian parliament on Friday approved an austerity budget, involving spending cuts worth EUR 48 billion ($67 billion) over three years.
Trichet maintained that the euro is in no danger due to the peripheral crisis, adding that "the Europeans can manage the issue." According to him, it is not a question of technique, but one of will and determination.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.