Any move by Greece to restructure its debt would have catastrophic effects, ruining its banks and crippling its economy, European Central Bank Executive Board member Lorenzo Bin Smaghi said in an interview on Thursday.
"According to our analysis, a debt restructuring would result in the failure of a large part of Greece's banking system," Bini Smaghi told Italian business daily Il Sole 24 Ore in an interview published on Thursday.
"The Greek economy would be on its knees, with devastating effects on social cohesion and the maintenance of democracy in that country," he was quoted as saying.
"Ultimately it's up to Greece to decide the way forward, given that it will suffer the worst consequences. But other countries must avoid pushing it towards a catastrophe."
The ECB board member also further rate hikes in the euro zone would depend on economy and inflation, adding the euro was currently 10 percent lower against major currencies in real terms. Bini Smaghi's stark comments came a day after German Finance Minister Wolfgang Schaeuble was quoted as saying that "additional steps" would have to be taken with Greece's huge public debt burden if an analysis from the ECB and European Commission in June showed it was unsustainable.
source: Reuters
