Greece’s debt is unsustainable and creditors are wrong to believe they can get all their money back, a Bank of England policymaker said on Tuesday [3/Feb].
Germany has said it was unwilling to reduce Greece’s debt, a stance which Martin Taylor, a member of the BoE’s Financial Policy Committee, signalled could be unrealistic.
“It looks to me to be unsustainable,” Taylor told Britain’s parliament when asked about Greece’s debt.
“If the creditor nations really do believe they are going to get their money back, we are in an even worse situation than I think we are,” Taylor told parliament’s Treasury Select Committee.
One of the “tragedies of the European situation” was that Germany was split between being pro-European at all times, and the need for monetary and financial rigour at all times, Taylor said.
“When these come into conflict, the easiest way to resolve it is to claim that monetary and financial rigour is pro-European,” Taylor said.
“This conflict needs to be laid bare … and one just hopes that Germany will come to a coherent solution and I am sure they will,” Taylor, a former senior banker, added.
A deal on Greek debt would, however, not solve the euro zone‘s underlying problems such as the lack of a true fiscal and monetary union, Taylor added.