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Germany warns Greek bondholders will have to accept steeper ‘hair-cut’

Monday, October 17th 2011 - 17:28 UTC
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Finance Minister Wolfgang Schaeuble: “no definitive solution” at the next Euro summit Finance Minister Wolfgang Schaeuble: “no definitive solution” at the next Euro summit

Germany lowered expectations of a breakthrough in the Euro zone's sovereign debt crisis next weekend, saying Sunday's EU summit will not produce a final solution, and kept up pressure on banks to accept bigger write-downs on Greek debt.

German Finance Minister Wolfgang Schaeuble said in a speech in Duesseldorf Monday that while European governments would adopt a five-point platform to address the turmoil, it was wrong to expect “a definitive solution” at the summit.

Schaeuble said the plan would have to include a reduction in Greece's debt mountain. He repeated at the weekend that private bondholders would have to accept steeper voluntary write-downs on their Greek holdings than the 21% agreed last July.

Merkel's spokesman said the government was working “intensively” to define how German banks would participate in a second rescue package for Greece and how to make best use of the bloc's 440 billion Euro rescue fund, the European Financial Stability Facility (EFSF).

Greece's overall debt mountain is forecast to climb to 357 billion Euros this year, or 162% of annual economic output – a level economists agree is unsustainable.
 

Categories: Economy, Politics, International.

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