Greece only has days to reach deal with creditors - Noyer

  • World
  • Tuesday, 09 Jun 2015

Greek Finance Minister Yanis Varoufakis attends a discussion meeting of the Hans Boeckler Foundation in Berlin, Germany, June 8, 2015. REUTERS/Fabrizio Bensch

MONTREAL (Reuters) - Greece has only "a matter of days" to reach a deal with its international creditors, European Central Bank governing council member Christian Noyer said on Monday, adding that a Greek exit from the euro zone would not cause a problem for the currency bloc.

Noyer, who is also governor of the Bank of France, said it was "extremely urgent" for Athens to reach a deal and that realistically it had only "a matter of days" since any late-June agreement would need to be approved by European legislatures.

Speaking to reporters at an economic conference in Montreal, Noyer also said while the European economy was recovering as the European Central Bank had hoped, it was too early to declare victory and change monetary policy.

His remarks came as Athens proclaimed a new willingness to compromise with its international creditors to try to come to a deal that would keep it within the euro zone.

Noyer said the pressures on the bloc and peripheral countries from a possible "Grexit" were not the same as several years ago. He added that contagion should not be feared because powerful firewalls had been put in place, and peripheral countries had fixed their fiscal positions, adopted structural reforms and had high growth rates.

"The problem of Greece is a problem for Greece itself," he said, adding that he was anxious for the country. Greece's problem is not one of debt but of restarting its economy, and that requires reforms and not destroying those reforms already in place, Noyer said.

"Frankly speaking, we have not seen a convincing bunch of proposals that ... would be able to convincingly restart the economy," he said.

Asked about a recent global rise in bond yields, he said some volatility was natural in markets and that central banks were looking at whether it was too high.

Referring to the ECB's quantitative easing programme, Noyer said he did not understand the argument that there would not be enough assets for the central bank to buy in its effort to inject credit into the market.

"So far we tend to think that the way we have set up our policy is appropriate," he said.

Noyer also said the U.S. dollar-euro exchange rate has traded in normal ranges and the dollar's recent strength should not raise red flags. He added, however, that the euro's appreciation against the greenback in recent years was strange considering that the European recovery was less advanced than that of the United States.

The difference in U.S. and ECB monetary policy and forward guidance reflects the different economic cycles in the two zones, he said.

"That's relatively normal and standard. So far, the relationship between the two currencies has remained in ranges that are fully explainable by these difference of conditions, and I do not see why it should warrant significant questions," he said.

(Reporting by Randall Palmer and Allison Lampert; Editing by Jeffrey Benkoe and Paul Simao)

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