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Greek Swaps 'Dug Up' Because of US Regulatory Battle?

Greece's debt swaps came to light because of the battle between big banks and regulators in the US, Gikas A. Hardouvelis, professor of finance at the University of Piraeus and chief economist at Eurobank EFG Group, told CNBC Thursday.

The Parthenon in Greece
Scott E. Barbour | Getty Images
The Parthenon in Greece

The controversial transactions at the beginning of the last decade, which prompted an inquiry by the Eurostat, were legal at the time, Hardouvelis, who was director of the economic office of the former Greek Prime Minister Costas Sinmitis between 2000-2004, told "Squawk Box Europe."

"In my view this whole issue is being dug up because of the big battle that's going on in the States right now between big banks and regulators and the battle is going to take a long time to unravel," he said.

Hardouvelis admitted that these transactions never caught his attention as they were legal and "they were securitizations, the way everybody believed securitizations were in the past."

He reiterated the view expressed by Yiannos Papantoniou, a former Greek finance minister, that not only Greece but other euro zone countries were doing such deals at the time and rejected criticism regarding the lack of transparency of such deals.

"I think people who buy and sell government securities across Europe were very aware of these securitization issues. It was not something that was done in Greece alone," Hardouvelis said. "The investment community I don't think was misled, everything was transparent."

The transactions allowed countries to buy euros lower historical rates and record the debt for statistical purposes at the stronger market rate, thus making the debt look smaller. Eurostat banned this way of registering debt in 2008.

"In any case as I said the securitization issue was OK'd among Europeans," Hardouvelis said.

"When you securitize you bring in revenues from the future to the present so essentially you free up your hands to spend now at the cost of tying up your hands later, that's obvious," he added.