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Schäuble pushes for Greek debt restructuring

The Local · 8 Jun 2011, 12:09

Published: 08 Jun 2011 12:09 GMT+02:00

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In the letter, which is dated Monday and was sent to the European Central Bank, the European Commission and the International Monetary Fund, Schäuble calls for "a quantified and substantial contribution of bondholders to the support effort" for Greece.

"Such a result can best be reached through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years," Schäuble wrote.

German authorities have insisted on private sector involvement in any future Greek rescue plans but had not given details on what they expected until now.

The finance minister also evoked "a real risk of default within the eurozone" if Greece is not granted the next slug of aid contained in an initial rescue plan worth €110 billion ($160 billion) backed by the European Union and International Monetary Fund.

He added that "I see a need to reach agreement on a new programme for Greece to ... prevent a bankruptcy. I am aware that discussions on private sector participation continue, but I am sure they will result in a constructive solution before our meeting on June 20," Schäuble said.

He referred to a gathering of eurozone finance ministers.

The ECB opposes forcing private investors to participate in a new Greek rescue plan, because it would be tantamount to restructuring the country's debt, which could have serious consequences for the eurozone as a whole.

Story continues below…

But ECB officials have indicated they could live with a roll over of Greek debt on a voluntary basis, which would involve banks and other investors agreeing to buy new bonds to replace ones set to mature in the next couple of years.


The Local (news@thelocal.de)

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Your comments about this article

12:29 June 8, 2011 by delvek
You cannot prevent the invetible global economic crisis which will only be corrected through ___________.
12:39 June 8, 2011 by Fruitkok
I just spent 5 months in Athens and is is all so obvious: they borrowed money from us + our holiday expenditures = to buy our products. It's not just that they are corrupt, it is also our stupidity, the stupidity of our banks, our supervisors and our politicians.

We say that Americans are the experts of cowboy capitalism, well it looks like we also know how to do it. We all from the North have to pay the price and we should just accept that and cut it as soon as possible. Then let's hope we have all woken up and that it won't happen again. Romania stopped enlargement, Greece stopped the idiocy of handing money from the North to the rest of the world.
13:12 June 8, 2011 by ChrisRea
Romania did not stop enlargement (there is actually no reason why it should have done it) http://www.bbc.co.uk/news/world-europe-11283616. Eight new countries are expected to join between 2012 and 2021.

US will still need to borrow money (even if they are close to default) and I did not hear of any Northern country saying it would not lend.

The root of the problem is that Greece lied about their figures and the EU did not really audit them. So probably what the main learning point should be is that the audit procedures should be enhanced.

My bet is that Greece will get back to normal, but it will take couple of decades.
18:04 June 8, 2011 by MJMH
Why not just let Greece and Ireland and Portugal and probably Spain and perhaps even Italy fall. Get it over with. There is no way within the bounds of the EU that those nations can compete with Northern Europe. Just think if there had been no EU there wouldn't have been such a E coli scare.
20:17 June 10, 2011 by Jack Kerouac
How will this money be distributed? We are just going to hand over bilions of Euros without a plan of distribution, without German oversight and auditers to make sure it is spent in the right way? What's to stop greece from just taking the money and using it in the corrupt way they've been using their own country's funds? We should elect people who will stop including every country in the European Union who wants it, despite qualifications. Are there, in fact, ANY qualifications necessary for EU entry anymore? What a joke.
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