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Bundesbank chief says Greek capital controls should stay until new bailout

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Capital controls in Greece should stay until a new bailout has been agreed, the head of Germany's central bank said on Thursday, arguing that the country's banks should get no extra central bank support until Athens has signed a deal.

[FRANKFURT] Capital controls in Greece should stay until a new bailout has been agreed, the head of Germany's central bank said on Thursday, arguing that the country's banks should get no extra central bank support until Athens has signed a deal.

"Central banks need to show where their limits lie," Jens Weidmann told an audience in Frankfurt. "The Eurosystem should not increase the liquidity provision, and capital controls need to stay in force until an appropriate support package has been agreed ... and the solvency of both the Greek government and the Greek banking system has been ensured."

Jens Weidmann's typically blunt remarks underscore the degree of opposition in Germany to further support for Greece after months of acrimonious negotiations that have taken it to the brink of leaving the euro.

His statement that Greek banks should get no additional liquidity support, just as they are about to run out of cash, strike an uncompromising stance but one that has increasing support in the eurozone.

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Weidmann, who also sits on the European Central Bank's Governing Council that set the level of Emergency Liquidity Assistance (ELA) for Greek banks, said it was up to euro zone countries and not the ECB to resolve the Greek problem.

"It needs to be crystal clear that responsibility for further developments in Greece ... lies with the Greek government and the countries providing assistance - not the ECB Governing Council."

He did, however, appear to leave the door slightly open to helping Greece temporarily. Any such decision would be taken by ECB President Mario Draghi's executive and the eurozone's 19 central bank chiefs.

"In the event that further short-term assistance is thought to be desirable or necessary, it is up to fiscal policymakers to provide ad hoc financial support," he said.

REUTERS

Read more on the Greek crisis here

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