Europe News

No automatic implication for banks if state defaults: ECB official

Yves Herman | Reuters

A default by a euro zone member state has no automatic impact for that state's banks, ECB Vice President Vitor Constancio said on Monday.

"If the state defaults, that has no automatic implications regarding the banks, if the banks have not defaulted, if the banks are solvent and if the banks have collateral that is accepted," Constancio said in reply to a question at a European Parliament committee hearing.

The remarks are most relevant to Greece, where experts are uncertain whether the ECB would declare the country's banks insolvent and disqualify them from getting emergency funding were the country to default. The comments indicate that it may not.

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