Draghi bombshell: Greece to enter QE only if debt viable

Second review has to close before any progress can be reached, says central banker

Greece would be admitted in the European Central Bank’s (ECB) quantitative easing (QE) program only when the EU institutions and the International Monetary Fund (IMF) agreed on the implementation of debt relief measures after 2018, said the European Central bank (ECB) President Mario Draghi.

The central banker made it clear during his briefing of MEPs before the European Parliament’s Economic and Monetary committee that a necessary condition for Greece to be accepted in the QE program was a viable Greek debt and the conclusion of the second review.

Responding to a question by Greek MEP Notis Marias, Mr. Draghi stressed that imposing short-term measures associated with the Greek debt followed by an detailed examination of the medium term measures were imperative conditions before the ECB could independently evaluate the viability of the Greek debt. “We might be close to that target [ECB buying Greek debt] provided the second review closes soon”, he stressed.

The second review of the Greek program has stalled substantially due to fundamental disagreements on the viability of the Greek debt between the European institutions and the IMF, with the latter questioning the targets set and Germany threatening to abandon the bailout without the IMF, as well as a breach of trust with the Greek government and the creditors following the adoption of a pension bonus by PM Alexis Tsipras.