US: tighter rules will prevent risky swap trades

A U.S. official said Tuesday that American plans to set higher capital requirements for derivatives would have prevented Greece from using currency swaps to hide debt before it joined the euro in 2001.

Gary Gensler, the chairman of the U.S. Commodity Futures Trading Commission, told European Union lawmakers that rules requiring all swaps to be settled through a central clearing house would also have forced Greece to put up a billion dollars in collateral, instead of hiding the loan in a derivative.

He says the U.S. plans to "set capital standards so high to discourage such transactions."

U.S. investment bank Goldman Sachs helped Greece exchange dollar and yen debt for euros in 2000, reducing Greece's reported public debt by euro2.37 billion or from 105.3 percent of gross domestic product to 103.7 percent _ still way above the EU's 60 percent limit.

The bank says their impact was minimal and within the rules. Greece also insists that the swaps were legal within EU rules when they were used.