Greece and Eurobonds Divide Austria
The Greek exit and the introduction of Eurobonds are discussed heatedly. In Austria, there is no clear tendency.
The governor of OeNB Ewald Nowotny warns of an exit of Greece. This scenario would bring enormous difficulties, Nowotny said. However, Nowotny does not deny that the Eurozone members currently work on exit strategies.
“A good central bank must be prepared for all eventualities, but it does not need to talks about all issues publicly.” Nowotny did not answer whether other states could be infected after the Greek exit.
For RBI´s CEO Herbert Stepic it is obvious that there is no other alternative if the far-left Syriza party wins at the next elections in June. The exit would worsen the situation in Greece additionally, the executive thinks. The consequences would be the re-introduction of the Drachma, a massive outflow of funds, numerous insolvencies of Greek debtors and unemployment, Stepic says. RBI´s chief executive officer sees a 50-50 odd.
For RBI, Stepic does not see an acute danger. In the worst case scenario, RBI disposes of liquid reserves of € 25bn.
Austria´s Minister of Finance Maria Fekter is still against Eurobonds, as Austria´s interest payments would rise. However, Fekter did not exclude to issue Eurobonds in the long run. Also the leader of ÖVP and Vice-Chancellor Michael Spindelegger is an opponent of the idea. “I am not available for the collectivization of public debt.”
By contrast, WKO´s President (Austrian Chamber of Commerce) Christoph Leitl supports the introduction of Eurobonds. “With this solution, Europe can reduce speculative attacks.”, Leitl alleges. Moreover, Leitl hopes that Eurobonds help the euro to become a world currency. WKO´s President asserts that Austria´s interest payments would decrease by € 2.0bn per year in the long run and suggests a model with three groups of countries with three different interest rates. The precondition would be to introduce strict rules.
Some days before, Chancellor Werner Faymann supported the French President Francois Hollande, after he had called to introduce Eurobonds soon. For Faymann, this is a „medium or long-term issue“. Hollandes still faces resistance by Germany´s Chancellor Angela Merkel.
WIFO´s director Karl Aiginger is skeptical and thinks that costs would increase for Austria. This would be the price to help Southern Eurozone member states. Perhaps in the medium run, Eurobonds may be a benefit for Austria too. In the short term, countries like Austria and Germany would have to bear higher costs, Aiginger says.