ECB noncommittal on helping Greece

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ECB noncommittal on helping Greece

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A Greek debt deal came just as European Central Bank President Mario Draghi started his news conference following the Bank’s monthly policy meeting.

He refused to say what part the ECB might play in averting a ruinous Greek default as he announced interest rates would stay at a record low 1.0 percent and spoke of continued eurozone debt worries: “We expect the euro area economy to recover very gradually in the course of 2012. The very low short-term interest rates and all the measures taken to force the proper functioning of euro area financial sector are lending support to the euro area economy. This outlook is subject to downside risks. They notably relate to tensions in euro area debt markets and their potential spillover to the euro area real economy”

With regard to the Bank helping Greece reduce its debt, Draghi left the door open to that possibility.

The ECB holds more than 50 billion euros of Greek government bonds, which it bought at a discount paying less than 40 billion. It has also received interest payments on some of those bonds.

If it sells them at a profit, the money — 12 billion euros or more — could go indirectly back to Athens.

Draghi admitted that could be done without breaking a ban on financing states.