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Swedish tax payers should not be paying for further Greek bailout: PM Reinfeldt

Tuesday, 25 October 2011
Swedish taxpayers would not need to be a party to commit to any form of payment to the Greeks in the form of the rescue plan being discussed, on the subject of plans to rescue Greece and the crisis of European banks.

The assessment was made by the Swedish Prime Minister, Fredrik Reinfeldt when he consulted with the Parliamentary the Committee of the Swedish Rikdag prior to Wednesday's EU summit on the debt crisis.


“We must secure the financial system but in a way that implies that bank owners have to pay," said Reinfeldt, and judged that such a solution may be within reach.

Fredrik Reinfeldt said after the consultations that he did not want to speculate on what a debt reduction for Greece by 50 percent would impact.

“If you write down half the debt, it's enormous resources. Overnight there will be a long list of assets in the form of government securities in banks and elsewhere that becomes worthless. This is why it is so difficult, "said Reinfeldt, adding that there must be systems and emergency measures that allow that chaos does not break out.

"Just as we have learned that banks will not fall, countries too should not. Greece has debt levels that they can not handle. As it is necessary to possibly create the better future for Greece it therefore requires that tough measures are implemented in combination with debt reduction, "said Reinfeldt.

A decision to write down Greece's public debt, according to Swedish Finance Minister Anders Borg, is a very difficult and uncertain decision. Therefore, it is more important that the safeguards that are now planned will be in place. Even though these are in place, it is likely there is still an unsafe situation in the future anyway.

"There is a high risk that it will trigger a period of economic uncertainty. Chaos is a strong word, but that is why it is important to strengthen the EFSF: one, identify capital requirements and other things so that you have dikes and firewalls so that it does not spread, "said Borg to reporters after consulting the Parliamentary Committee prior to Wednesday's extraordinary Ecofin meeting.

When asked what the uncertainties concrete would be Borg said that
"If you write down the (Greek) government bond, banks will lose what they have as such bonds on their balance sheet.  Then, they loose the money. ”According to Borg Swedish banks' holdings of Greek government bonds is however not large.
By Team

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