ECB ready to help Greece by not taking bond profit

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ECB ready to help Greece by not taking bond profit

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European Central Bank policymakers have said that they do not want the bank to make a profit on the Greek government bonds it bought at well below face value in 2010.

Instead it may pass the profits on to eurozone member states and that money could then go to Greece to help Athens avoid a chaotic default.

Governing council members Joerg Asmussen and Luc Coene both backed an idea floated by ECB President Mario Draghi last week.

The ECB has faced increasing political pressure to play a more direct role in helping Greece stabilise its finances and avoid a ruinous default.

Coene, Belgium’s central bank chief, said earlier the ECB had decided to distribute profits from Greek bonds to member states, which they could decide to pass on to Athens.

“What we have agreed in the euro system is that we indeed do not wish to make a profit from the transactions with Greece and, when the profit from past years is distributed, each government will determine what proportion is due to Greece,” Coene said.

“It is for the governments to decide what to do,” he added.

Profits from the ECB’s bonds will only become available when the bonds mature, meaning the money is likely to come in in dribs and drabs over years rather than in one easy lump sum.

If the money was needed up front, however, the ECB could get round the problem by selling the bonds to the eurozone rescue fund, the EFSF, at their full value rather than the discount price it paid for them.