The ECB Plans To Hand Profits Over From Greek Bond Holders to Governments to Overcome Shortfall

“European Central Bank policy makers signaled they may distribute profits from Greek bond holdings to governments to help make up a possible shortfall in aid to the embattled nation.

Governing Council member and Belgian central bank governor Luc Coene said ECB officials have agreed that they “don’t wish to make a profit on Greece.” Executive Board member Joerg Asmussen, echoing remarks by fellow board member Benoit Coeure, told Reuters that the ECB can pass any profits on to national central banks and “then the member states can decide to use this as a contribution to finance the Greek program.”

The comments suggest the ECB may disburse profits on Greek bonds as they mature, giving governments additional cash to help Greece avoid a default. While the ECB has also looked at exchanging its Greek securities for bonds from the government- based rescue fund, the European Financial Stability Facility, Bundesbank President Jens Weidmann suggested politicians don’t favor that plan.

“If governments were prepared to buy the bonds from us, we certainly wouldn’t shy away from that discussion,” he told the Handelsblatt newspaper. “Such willingness is not apparent.”

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