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German Bundesbank warns Greece not to reject reforms Posted 2012/05/23 at 6:27 am EDT BERLIN, May 23, 2012 (Reuters) — Germany's Bundesbank said on Wednesday the situation in Greece was"extremely worrying" and it was jeopardizing any further financialaid by threatening not to implement agreed reforms. In a toughly worded monthly report, the German central bank saidGreece would have to bear the consequences of such a scenario,while the challenges that would arise for the euro zone would be"considerable but manageable". Echoing German political leaders, the Bundesbank warned againstEurope easing the conditions for Greece to access aid. "A significant dilution of exiting agreements would damageconfidence in all euro area agreements and treaties and stronglyweaken incentives for national reform," it said. Greece holds a second election on June 17 after a previous pollproduced a parliament split between supporters and opponents of anIMF-EU bailout program that requires Athens to make deep spendingcuts and hike taxes. Anti-bailout parties are expected to repeat their strongperformance, opinion polls show, increasing the risk that Greecewill renege on its austerity pledges, default on its debt andpossibly leave the single currency. The Bundesbank said the Eurosystem of euro zone central banks hadassumed "considerable risks" by providing Greece with large amountsof liquidity. "In light of the current situation, it should not significantlyincrease these risks," the bank said. "Instead, the parliaments and governments of the member statesshould decide on the manner in which any further financialassistance is provided and therefore whether the associated risksshould be assumed." The bank said it would be crucial to phase out the non-standardmonetary policy measures in the future, to contain the risksarising from them such as distorting competition in the bankingsector or inciting the delaying of structural reforms. The Bundesbank said Germany's economic upswing would continue inthe second quarter, driven by construction and consumption, whilethe manufacturing sector would "probably only make a comparativelysmall contribution". "In light of all this, calls on German fiscal policymakers toloosen their fiscal policy stance in order to stimulate the economyappear inappropriate," the bank said. "Attempting to kick-start the economy in the short term and puttingoff consolidation efforts in the long term are not conducive toregaining lost confidence." (Reporting By Sarah Marsh, editing by Gareth Jones). We are high quality suppliers, our products such as Protective Phone Covers Manufacturer , China Epoxy Resin Sticker for oversee buyer. To know more, please visits Tablet Protective Film.
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