ECB may take losses in second Greek debt restructuring
Private creditors have already suffered big writedowns on their Greek bonds under a second bailout for Athens sealed in February, but this was not enough to put the country back on the path to solvency and a further restructuring is on the cards.
The latest aim is to reduce Greece’s debts by a further 70-100 billion euros, several senior euro zone officials familiar with the discussions said, cutting its debts to a more manageable 100 percent of annual economic output.
This would require the European Central Bank and national central banks to take losses on their holdings of Greek government bonds, and could also involve national governments also accepting losses.
The favored option is for the ECB and national central banks to carry the cost, but that could mean that some banks and the ECB itself having to be recapitalized, the officials said.
The ECB declined comment.
Planning is in the early stages and no formal discussions have yet taken place. But there is an awareness that Greece is way off-track in improving its finances and that aggressive action is needed to keep the country inside the euro zone.—Newswire