Greek central bank head says Grexit not an option

[LONDON] The governor of the Greek central bank ruled out the country's exit from the eurozone on Wednesday, and said that Athens was close to reaching a deal on its bailout.

"Grexit is not an option for Greece, it is not an option for the eurozone. It is not going to happen," Yannis Stournaras told an event in London.

The central bank governor said the competitiveness of the Greek economy had been restored in the last five years and that an exit "would deliver no benefit and a lot of pain".

Stournaras added that the new Greek government was "close to an agreement" with EU partners, and that no third bailout would be needed if a deal was reached swiftly.

"If Greece proceeds quickly to an agreement with its partners then the existing money is sufficient to provide a buffer until we can have access to financial markets," Stournaras said.

Athens has faced funding difficulties since the EU and IMF refused to release the final tranche of Greece's 240-billion-euro (S$357 billion) bailout, after the leftist Syriza government of Prime Minister Alexis Tsipras came to power in January on a platform of reducing austerity.

EU officials have expressed fresh hopes that a new deal could be reached with Greece in recent days, and Stournaras said he had become more optimistic in the past month.

Stournaras' comments come after the European Central Bank instructed Greek banks not to increase their exposure to Greek sovereign debt, increasing pressure on Athens to reach a deal.

Greek banks are the main source of financing for the Greek government as the primary purchasers of short-term treasury notes.

AFP