The European
Central Bank (ECB) has profited handsomely from its holdings of Greek
government debt, according to a document seen by the Financial Times.
A written
response to a request from a Greek MEP showed the bank collected €7.8
billion in interest payments between 2012-2016 on Greek sovereign
bonds acquired under its Securities and Markets bond-buying program
(SMP).
Profits are
usually redistributed among the 19 eurozone central banks.
In 2016, the
ECB collected more than €1.1 billion in interest payments on the
nearly €20 billion worth of Greek bonds it holds, according to
German daily Suddeutsche Zeitung.
An analysis
from the Jubilee Debt Campaign estimated Greece’s other creditor,
the International Monetary Fund, had made €2.5 billion from its
loans to the country.
According to
Leo Hoffmann-Axthelm from Transparency International, the ECB’s
participation in Greece’s bailout had led to a “conflict of
interest.”
“The
ECB expects repayments on its Greek bonds with one hand while
approving Greece’s reform progress with the other. The Bank is
literally sitting on all sides of the table,” said
Hoffmann-Axthelm.
The SMP
program was started at a time of the eurozone’s debt crisis in 2009
was aimed at easing market pressure on the borrowing costs of member
states. Later in 2015, the ECB started its quantitative easing (QE)
program, but Athens was barred from it because it’s still under the
terms of a third EU bailout.
Greece’s
inclusion into QE could happen only when the central bank decides the
country’s 180 percent debt to GDP is sustainable. Most of the
country's near €300 billion government debt is in the hands of
international rather than private sector creditors.
“This
is a matter of national competence and falls outside the remit of the
ECB," said the central bank in a letter to FT signed by ECB
President Mario Draghi.
Decisions
about what to do with the earnings will be taken by national member
states, the letter explained.
“Any
future decisions on the transfer to the Greek State of amounts
equivalent to the National Central Bank’s (NCB) income do not fall
within the remit of the ECB or the NCBs, but rather that of the
national governments of the euro area member states,” it said.
Eurozone
members initially agreed to hand any interest back to the Greek
central bank as a point of EU solidarity. However, when the second
bailout program started in 2015, the pay-back operation was halted,
and the full interest was never paid back to Athens.
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