Time is running out for Greece to reach a deal on its debts with its eurozone backers, the president of Germany’s Bundesbank warned on Monday, urging Athens to act to avoid a default that could tip it out of the eurozone.
The Greek government is sticking to demands that its creditors propose less harsh terms for a cash-for-reforms deal after talks collapsed at the weekend, bringing it one step closer to a default.
“Time is running out for Greece,” Jens Weidmann, the head of Germany’s central bank, told a conference in Frankfurt. “The willingness to do a deal and act is lacking.”
“We need to ensure that Greece can stand on its own legs without the help of partners,” he said. “That’s why the ball is clearly in the court of the Greek government.”
Weidmann also said that high debt and the resulting tax burden for companies and households could dampen growth in the eurozone, something that could not be tackled by making monetary policy more expansionary.
“The fact is that the circumstances named are all factors that burden growth and that cannot be eliminated with a monetary policy that is still so expansionary,” he said.
Weidmann also said that monetary policy could help bring about a return to sustainable and solid growth, adding that this could be best achieved by ensuring currency stability in the long-term.
He added that it should not be understood as a panacea though.
“Monetary policy must not be misunderstood by politicians and the public as a ‘saviour’ and be overloaded with regard to options that promote growth and ultimately be overburdened.”