Euro zone split over interest on Greek aid-source

The euro zone is split over the rate of interest it should charge Greece if Athens asks for emergency loans, with Germany and the Netherlands calling for higher rates to prevent moral hazard, a euro zone source said.

"There is an issue of the rate of interest," the source said, but declined to name exact numbers being discussed.

"It is all a question of moral hazard — how to prevent moral hazard. By charging rates that are too low you could be understood to encourage such behaviour," the source said.

The Financial Times reported on Tuesday that Germany wanted to lend Greece at 6.0-6.5 percent, while the rest of the euro zone was ready to accept 4.0-4.5 percent.

The source said the discussions were theoretical because Greece was unlikely to use the emergency aid mechanism, which leaders of the single currency area agreed on in March.

Under a compromise brokered by euro co-founders Germany and France, Greece would qualify for assistance only if it were unable to borrow on the markets, and a unanimous euro zone decision would be required to trigger a rescue.

Euro zone states would provide the majority, some said two-thirds, of help in coordinated bilateral loans, on strict conditions proposed by the European Commission and the European Central Bank, while the IMF would provide the rest.

However, many key details remain to be spelled out, including the cost of emergency loans, what precise role the IMF would play and what would happen to its normal conditionality.