From the beginning, it’s been clear that the bailout of Greece would be a bailout in large part of French banks, owing in part to the fact that French banks had the biggest exposure.Yet apparently some top German bankers are alarmed at how things are playing out.
A report in Der Spiegel (in German) suggests that top Bundesbank bankers see a “plot” underway at the ECB.
From Google Translate
Germany’s top bankers are confused: € 25 billion, the ECB has so far spent on Greek government bonds. According to SPIEGEL information suggested the Bundesbank, that is served chiefly to Paris – so French Institute could get rid of their scrap paper.
Here’s what they’re upset about: The ECB is buying up Greek debt (largely from French banks), but the Germans don’t understand why. After all, Greece has already received its bailout money already ; Greece should be able to pay back its debt in full.
Why, then, do French banks need to offload its junk paper?
Beyond the fact that the French have the biggest exposure, there’s another reason why the French may be winning bag:
Some senior central bankers do suspect a French plot, after all, ECB chief Jean-Claude Trichet, a Frenchman, under pressure from French President Nicolas Sarkozy revealed an iron rule of the monetary base – that is never to buy government bonds from Member States.
Throw in another Frenchman, the IMF’s Dominique Strauss-Kahn, and you have all the right people in power.