A FORMER European commissioner has accused Greece’s central bank of encouraging short selling of Greek bonds by altering the regulations on its electronic bond trading platform last year.
Vasso Papandreou, a deputy in the governing Socialist party, made the charges yesterday in a written question to parliament.
She said an extension of the settlement period and the abolition of penalties for failed bond trades had made it easier for speculators to short Greek bonds.
“The Bank of Greece knew the country’s negative fiscal situation. Why did it facilitate the speculation?” asked Ms Papandreou, who is not related to George Papandreou, the Greek prime minister.
Her question reflects growing concern in the Socialist party over an apparent policy contradiction in the handling of Greece’s debt crisis.
Mr Papandreou claimed the surge in spreads that resulted in Greece seeking a €110 billion bailout last month from its euro zone partners and the International Monetary Fund was the result of sustained shorting of Greek bonds by unnamed speculators and hedge funds. – (Copyright The Financial Times Limited 2010)
