The pressure mounts for Greece and its creditors to reach a mutual agreement on a loan extension.
Thursday, February 19, 2015
Greece’s latest request was swiftly blocked by Germany while European investors watched the drama unfold. Stocks in the eurozone fluctuated on Thursday as the Greek situation has failed to improve.
Germany claimed the most recent Greek offer did not contain “a substantial proposal for a solution,” according to reports. On the other hand, Greece has made it known that it will not submit to all the strict austerity requirements in its current bailout program.
As a result, the Stoxx Europe 600 made initial gains of 0.2%, but dropped following the German response. France’s CAC 40 gained 0.47%, the German DAX inched up by 0.02% and the FTSE 100 in the UK declined 0.23%.
Germany, Greece divided on bailout terms
With the latest refusal of a Greek extension proposal, the economically troubled nation and its creditors head for more negotiations, reported The Wall Street Journal. So far, Germany is taking a hard-line approach.
“The letter from Athens doesn’t offer a substantial proposal for a solution. In reality, it aims for a bridging loan without meeting the terms of the [bailout] program,” Martin Jaeger, spokesman for Finance Minister Wolfgang Schäuble, said in a statement shortly after receiving the request.
The two sides must come to an agreement soon. Greece’s €240 billion bailout expires at the end of February, which would undercut the government’s financing and potentially isolate its banks from the lending branches of the European Central Bank. Those conditions could be enough to coerce Greece to leave the eurozone.
With all of that said, investors remain confident that the groups will come to terms before the end of the current bailout. European Commission President Jean-Claude Juncker believes Greece’s extension request was a positive sign, even though it was shot down.
Margaritis Schinas, Juncker’s spokesperson, said the letter “could pave the way for a reasonable compromise in the interest of stability in the euro area as a whole.”
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