Varoufakis meets Draghi

Greek Finance Minister Yanis Varoufakis described his one-hour meeting Wednesday with ECB President Mario Draghi as "constructive," but repeated his message that the current economic crisis in his country could not be treated using the methods prescribed under the terms of Greece's bailout program.

"The program has fueled a deflation crisis in the country," Varoufakis noted as he tried to shore up support for a plan to swap ECB-owned Greek debt for growth-linked and perpetual bonds, which he said would give his country more time to service its debt and spare privately-held bonds from more losses.

"I have no doubt that we can conclude our discussions with our European partners, as well as with the IMF and the ECB, in a very short space of time so that we can kick-start the Greek economy," he added.

The Finance Minister said his talks with Draghi had given him fresh hope, while the ECB itself said it would not be making any comments on the meeting.

Not much help in sight?

But DPA news agency reported that sources close to the central bank said the ECB was opposed to the Greek government's bond-swapping proposal, adding the lender was not willing to extend the maturity of credits granted to Greece.

They also hinted the ECB would not agree to increase the maximum volume of short-term treasury bills (T-bills) by 10 billion euros ($11.4 billion) to total of 25 billion euros. Greece's idea was to tap those additional bills in order to keep the country's finances afloat for a transitional period of some months until Athens was able to strike a new deal with its creditors.

Greece's bailout program expires at the end of this month, meaning urgent action is required to avoid massive liquidity problems.

Three of the country's four major banks were earlier reported tapping into emergency funding from the Greek central bank as some depositors had withdrawn their money due to political turmoil.

On Thursday, the Greek Finance Minister is due to meet his German counterpart, Wolfgang Schäuble, for talks in Berlin. The latter has perhaps been the staunchest opponent of Greek debt restructuring, saying any deals with creditors must be adhered to.

hg/pad (dpa, Reuters)