European Central Bank head MarioDraghisays the bank is ready to restore support for Greece's banks if talks between the Greek government and its creditors get back on track.
Draghitold EU lawmakers Monday that the parties should "restore the policy dialogue" so talks can could yield "a credible perspective" for a deal on more emergency aid.
Greece and its creditors in the 19-country eurozone have sparred over the conditions Greece needs to fulfill to get more help to avoid defaulting on its debts. Greek Prime Minister Alexis Tsipras is meeting German Chancellor Angela Merkel to try to break the logjam.
Once a deal is in sight,Draghisaid the ECB could restore the ability for Greek banks to tap ECB credit using Greek government bonds as collateral. Being able to use the bonds is an important source of funding to help keep Greece's financial system afloat. For now, Greek banks have been forced to borrow at higher costs from the Greek central bank.
Draghirejected a comment from one lawmaker that the ECB was "blackmailing" Greece into yielding to creditor conditions. He noted that the ECB held 104 billion euros ($124 billion) of credit exposure to Greece. "What kind of blackmail is this?" he said, calling the statement "a bit rich."
"We are not creating rules for Greece... we are simply observing existing rules.”
As for growth in the eurozone, said Draghi, it "is gaining momentum" thanks in part to a weaker euro, lower energy prices and stronger demand. Inflation will remain low until the end of 2015 and could dip into negative figures in the coming months. "The basis for economic recovery in the euro zone has clearly strengthened," Draghi told the EU Parliament.
"Inflation will remain very low or negative in the coming months... but the rate will begin again to gradually increase at year end".
http://www.neurope.eu/article/draghi-restore-dialogue-between-greece-and-creditors