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Greek FinMin: Once QE for Greek bonds, Grexit will be off the table

Greek bonds will soon become eligible for the European Central Bank’s asset-purchase program, paving the way for an easing of capital controls, and the gradual recovery of investor confidence, Finance Minister Euclid Tsakalotos said.

In an interview to Bloomberg, the Greek Finance Minister said also that once Greece is part of ECB’s Quantitative Easing, Grexit will be off the table.

“QE could follow as soon as July’s maturing debt is paid,” Tsakalotos said in an interview, referring to a July 20 payment of notes held by the ECB. “I feel confident Greek debt will be eligible”  by September, he said.

“Once you have QE, and depending on what your take is on the debt situation, you can take Grexit off the table,” Tsakalotos, a professor of economics at the University of Athens, said. “Then you have a straight runway for investors.”

However, before the QE, the European Central Bank must first grant a waiver, allowing the country’s banks to pledge government securities as collateral for regular financing. Greek bonds would normally be ineligible because because they aren’t rated investment grade.

Beginning of the month the ECB has signaled it will act when it’s confident the new aid program is on track.

Bloomberg notes that “after the Governing Council met on June 2, President Mario Draghi said “it will require another policy meeting” but agreed that “there will be a decision leading to the reinstatement of the waiver.”

Tsakalotos revealed that as liquidity will be restored, the government plans to ease the capital controls that were imposed after a run on deposits. “Restrictions on capital controls are already being eased and there is a road map toward full liberalization,” Tsakalotos said. “I’m hopeful that by autumn we’ll have some substantial change.”

Full interview here.

PS I thought, capital controls would be lifted at the end of first half of 2016. Who has said this? ehm… the chairwoman of the Greek banks? Somebody from the government? Too lazy to seek for the link – as usual.

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