ECB: Greece will not default

European Central Bank President Jean-Claude Trichet delivers a speech in front of members of the European parliament -- January 13, 2009.

TEXT OF STORY

Stacey Vanek-Smith: We mentioned Europe's Central Bank is meeting today trying to set policy and stabilize the situation there. There'd been speculation the bank would announce emergency aid plans in case the Greek debt crisis spread. But that didn't happen. The BBC's Rebecca Singer reports.


Rebecca Singer: Like the Federal Reserve in the U.S., the European Central Bank has the power to calm markets by pumping money into the system. But the president of the ECB, Jean-Claude Trichet, doesn't believe there's any reason to be concerned:

Jean-Claude Trichet: We did not discuss at all anything like default or such default procedure. On the contrary as you know, we are firmly on the side of the fact that Greece will not default.

The Greek parliament is currently debating a controversial loan package which will force it to make big spending cuts and tax rises.

Marie Diron is an economist at Ernst and Young, and believes other countries may also be at risk:

Marie Diron: The U.K. is one of the countries with very high deficits. Currently, the situation is much more manageable than in Greece, but if the markets were to take the view that the current plans for deficit reduction are not enough then there could be some tension, indeed.

Portugal and Spain have come under intense scrutiny as it becomes more expensive for them to borrow money.

In London, I'm the BBC's Rebecca Singer for Marketplace.

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