Bloomberg’s article, titled “Draghi Corners Greek Anti-Austerity Candidate by Tying Stimulus to Good Behavior”, points to the limits set on Greece by the European Central Bank (ECB) following a meeting by central bankers in Frankfurt on Thursday. Greece’s exclusion from the ECB’s bond-buying program, known as quantitative easing (QE), for at least six months will have ramifications for the new government following the January 25 elections.
Essentially, the ECB has decided that Greece will be ineligible for the 1.1 trillion-euro program until at least July, according to ECB President Mario Draghi. A statement on the ECB’s website claims that Greece should complete its stalled review of its current bailout, as purchases from program countries will be suspended during such assessments.
Athanasios Vamvakidis, head of the G-10 foreign exchange strategy at Bank of America Merrill Lynch, told Bloomberg that this decision would be a “carrot” to main opposition Radical Left Coalition SYRIZA that is favored to win Sunday’s elections. “The ECB will buy Greek gonds in July if there is a deal. I think it is the best Greece could hope for,”
On his part, Mr. Tsipras has pledged to sway the ECB that a part of the Greek debt should be written down so that growth can be achieved through public spending and job creation. He had said that a Greek exclusion from the QE would be akin to punishing a country already crippled from years of austerity.
