Mexican central bank chief Agustin Carstens sided with the European Central Bank as he told a newspaper that he understands the ECB's opposition to private investor participation in a second bailout package for Greece.
Carstens is seeking the top job at the International Monetary Fund, rivalling French Finance Minister Christine Lagarde, who is favourite to become the IMF's new managing director despite a legal investigation hanging over her.
"I find it unusual to bring private creditor participation into play in such difficult times," Carstens was quoted as saying by Die Welt in an interview to be published on Saturday.
"Such a step should better be discussed during calmer times. I can therefore understand the opposition of the ECB. But now the demands are out there and have to be dealt with."
The ECB and the German government are at logger heads about the issue. Germany stuck to its guns on Friday in demanding private investors contribute to a second Greece bailout.
ECB President Jean-Claude Trichet, on the other hand, made clear on Thursday the central bank opposed any scheme for private sector involvement that would cause a "credit event" or be considered by credit ratings agencies as a "selective default." [ID:nLDE7581Z8]
Asked how the dispute should be handled, Carstens said the government and the central bank would have to talk about what a participation should look like, but he declined to give advice from afar.
He said in general terms a debt restructuring could make sense for a country under certain conditions, but it has to be part of a larger package.
Lagarde is an adept negotiator with hands-on experience of the euro zone's debt crisis, which is seen as an advantage for her, while Carstens' policy views are seen as too conservative by many of his emerging market peers.
Carstens said that if elected to head up the IMF he would mobilise all resources to help Europe, but added there was no alternative to tough reforms for Greece. "Nobody said it would be easy. The country must now swallow the bitter pill," he said.
Greece could regain credibility on capital markets just as fast as it lost it, he added.
Carstens told Die Welt he wouldn't deny that Largarde is better connected in Europe than he is. "But I bring in an outside view and am not wearing the 'European glasses'. I also have broad experience in solving debt crisis."
Carstens was involved in Mexico's external debt renegotiations in 1989 and helped secure a special credit line from the IMF during the 2008-2009 financial crisis.
"Greece has to use this opportunity to bring its house in order," he was quoted as saying. "The EU and the IMF have done a lot for Greece. If Greece in return does not fulfill its commitments, eventually it will not get more aid."
Reuters
