BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble ruled out public investors accepting a debt restructuring, or "haircut", on their Greek bonds but said in an interview to be aired on Sunday that a debt repurchasing program could be considered.
"(A haircut) is a discussion that has little to do with the reality in the member states of the euro zone," Schaeuble said in an interview with Deutschlandfunk radio.
Schaeuble said sovereign states could legally not write off billions of euros of losses on their official holdings of Greek government bonds.
With frustration rising over a worsening recession and tough austerity reforms, Greek Finance Minister Yannis Stournaras said on Wednesday Athens was seeking a form of haircut by reducing the interest and extending the maturities of its bailout loans.
Schaeuble reiterated no agreement had been made on how to help Greece implement austerity cuts after Stournaras said international lenders had given Athens more time and a package of austerity measures would be put to parliament next week.
Any agreement with near-bankrupt Greece would have to be sustainable - last longer than six months - and be trusted by financial markets.
A deal on the package is crucial for Greece's efforts to unlock more aid under its latest bailout, with the country just three weeks away from running out of cash.
A debt repurchasing program, in which Greece would get new loans in order to pay back old debt, could be an option, Schaeuble said.
"That is a consideration that one can make seriously. It has been put up for discussion by some members of the central bank board."
But he refused to speculate on such a program until the troika of the European Central Bank, European Commission and International Monetary Fund had presented their final report on Greece's progress.
Schaeuble also said an agreement with Greece could include ideas such as cutting aid if spending went out of bounds.
"All those kinds of things - a control mechanism, a corrective mechanism - could perhaps restore the credibility we haven't so far reached for the Greek program," he said.
(Reporting by Annika Breidthardt; Editing by Helen Massy-Beresford)