Czechs want Greece out of eurozone

LONDON / FRANKFURT - Reuters

Greece should leave the eurozone and devalue its new currency unless Europe is willing to provide “massive” funding for Athens, Czech Central Bank Gov. Miroslav Singer said in an interview.

Singer told daily Hospodarske Noviny that Europeans should focus on helping banks which may need recapitalization and on issues that can be resolved, rather than devoting attention for years to Greece which represents just 2 percent of the European economy.

“If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the eurozone and a massive devaluation of the new Greek currency,” he said in the interview published yesterday. “So far Greece has been given loans that served mainly for buying time and for rich Greeks to move their money out of the country. This lowers the trustworthiness of Europe and the willingness of non-European countries to lend or provide new capital to the International Monetary Fund for helping Europe.”

In another development, data showed that commercial banks’ overnight deposits at the European Central Bank (ECB) hit a new record high of 464 billion euros.

High deposits indicate banks prefer the safety of the central bank for their funds to higher rates they could get by lending to each other.

Banks are awash with cash after taking an unprecedented 489 billion euros in the ECB’s first-ever three-year liquidity operation late last month and are mulling what to do with the money.

The liquidity operation was designed to repair confidence, but the debt crisis means many institutions still lack trust to lend to each other and prefer to stash their money at the ECB.The ECB pays 0.25 percent interest for overnight deposits, well below the 0.357 percent for which banks could lend out their spare cash on interbank markets.