Wall Street Journal
July 9, 2011
Discussions between bankers and government officials about Greece have undergone a fundamental shift in recent days, turning toward reducing the country's mountainous debt burden instead of just staving off a near-term financial crisis, people close to the talks say.
Talks began two weeks ago with French bank proposals to encourage investors to contribute to a new bailout by reinvesting the proceeds of Greek government bonds maturing over the next three years.
They have now have moved to focus on ways that Greece could cut its €350 billion ($500 billion) debt burden by taking advantage of the deep discounts at which its bonds are trading. One person involved in the talks said the discussions about debt reduction were "potentially transformational."
Finance ministers from the 17 nations that use the euro are expected to discuss the proposals at a meeting Monday in Brussels. They are expected to debate options that they previously discarded, including the use of European bailout funds to finance purchases of Greek debt.
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