There is a serious threat that Greek problems will spill over into other parts of the eurozone, said Axel Weber, a member of the Governing Council of the European Central Bank (ECB), on Wednesday. Weber, who heads Germany’s central bank Bundesbank, told German parliamentarians that Germany’s contribution to the Greek aid package worth 110 billion euros is justified.
"The inability to repay Greek debts in this currently very sensitive situation would pose a significant risk to the stability of the monetary union and the financial system," he said in an opening speech before the parliamentary budget committee. "There is a danger of serious consequences spilling over to other eurozone countries and increased negative feedback effects on the capital market." Greece would not be able to save itself from the crisis, and its ability to raise funds in the market was "seriously jeopardized." Weber stated that the aid package is acceptable because it is tied to strict conditions, including austerity measures and reforms promised by Athens.
"It is crucial that the program is tied to strict conditions, which will be reviewed quarterly," he said. "Only such strict conditions make the support measures acceptable." Similar concerns were expressed by the head of the International Monetary Fund (IMF) Dominique Strauss-Kahn, who stated to Le Parisien that there is a risk of the Greek debt crisis spreading to the rest of Europe, but that there is no real threat to large countries like France and Germany.
