German finance ministry unaware of any ECB plan to target bond spreads

| August 20, 2012 | 0 Comments

BERLIN (Reuters) – Germany’s finance ministry is not aware of any plans for the European Central Bank to target spreads of bonds of struggling euro zone member states, a spokesman said on Monday in response to a media report.

“I am not aware of any such plans and haven’t heard anything,” spokesman Martin Kotthaus told a news conference.

“In purely theoretical, abstract terms, such an instrument would certainly be very problematic. But I know of no proposal along these lines,” he said.

The latest edition of Der Spiegel says, without naming its sources, that the ECB is discussing interest rate thresholds for individual euro zone countries with a view to intervening if the premium over German bonds is exceeded.

Government officials also said that talks this Friday between Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras would culminate in a new roadmap for aid for Athens.

“We know that the subject of Greece will be at the centre of the talks, but the basis for all decisions on Greece is the troika (the ECB, EU and International Monetary Fund),” said government spokesman Steffen Seibert.

The troika is due to present its next report in September.

Seibert also stressed that any decisions on Greece had to be taken jointly with Germany’s European partners.

Samaras, facing mounting social and political discontent at home, is expected to ask for a two-year extension to the deadline that international lenders have set when he meets Merkel. He also meets French President Francois Hollande this week.

As Europe’s biggest economy, Germany is the euro zone paymaster and impatience with new bailouts is growing among voters and many politicians.

The finance ministry’s Kotthaus said the framework for the terms of aid for Greece had already been agreed.

“The program has a clear time frame, the program has a clear financial framework. The Memorandum of Understanding is the basis on which we are operating,” said Kotthaus, adding, however that within that framework there could be different priorities.

(Reporting by Stephen Brown and Madeline Chambers)

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