The head of the German Federal Bank (Bundesbank) Jens Weidmann has stated in the Handlesblatt newspaper that a new debt haircut would be counterproductive and send the wrong message to other countries with aid packages.
Mr. Weidmann further explained that a haircut would not change anything and that the crisis in Greece can only be overcome with reforms. The Bundesbank head added that “new help alone will not create competitive opportunities or a stable financial position”.
Mr. Weidmann was skeptical about the “deceptive” calm, as he believes that the euro crisis has not been overcome yet and asserted that the discussion for a new haircut of the Greek debt indicates that a lot still needs to be done. According to the Bundesbank head quickly declaring the end of the crisis is a mistake that will “weaken the reform efforts”.
