Greece’s problems cannot be solved by just a debt restructuring and it is an “illusion” to think so, according to ECB economics chief Jurgen Stark (via The Telegraph).
Stark also warned that a Greek debt restructuring would result in substantial stress for the country itself, that could spread to the rest of the eurozone. Earlier this week, the IMF suggested a shock to the system in Europe could lead to a whole new financial crisis in the region.
His warnings echo recent comments from other ECB members, who are standing against what appears to be a pro-restructuring group led by Germany, the European Commission, and the IMF. The ECB and France appear to be on the opposite side of the debate.
Stark’s comments come just a day after data on the Greek economy showed austerity had not been a success, with the country’s debt to GDP ratio still rising. Anecdotal reports also explain the deteriorating situation in the Greek capital of Athens, with poverty on the rise, and many fleeing to rural communities.