The European Union would not help bail out Greece, European Central Bank executive board member Juergen Stark was reported as saying today.
"The markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece," Mr Stark said in an interview with Italian newspaper Il Sole 24 Ore.
Mr Stark said in recent years Greece had not controlled its public accounts or worked to help improve the country's competitiveness.
"The Treaties envisage the non-rescue clause and the rules must be respected," he said.
All three major credit rating agencies downgraded Greece in December on concerns about the country's fiscal deterioration and worsening debt dynamics.
That has resulted in higher borrowing costs for the euro zone's most indebted country, raising concerns among investors about Greece's ability to raise fresh funds.
Still, Moody's Investors Service has said that Greece remained far from crisis and that the risks were long term rather than short term.
Mr Stark said inflation in the euro zone will remain steady until the end of 2011.
"Today the euro zone is characterised by a high degree of price stability which allows us to believe interest rates are appropriate," Mr Stark said.
He said a stable inflation outlook could be affected by higher economic growth or an inability to re-absorb market liquidity quickly - "two conditions that I do not see today".
The economic scenario had improved with growth seen since the third quarter of last year but the outlook was still uncertain, he said.
Mr Stark said he was not concerned about the possible creation of a "bubble" on stock markets created by liquidity injected into the markets.
"But it is clear the large liquidity placed at the disposal of the economy in recent months carries risks and negative effects," he said.
Reuters