July 11, 2011
European finance ministers promised on Monday to lighten lending terms for struggling countries like Greece and suggested that the existing bailout fund be expanded and allowed to pay for the purchase of sovereign bonds.
After more than six hours of talks in Brussels, the ministers issued a statement outlining a range of options for reducing the debt burden on nations that have accepted loans, including reducing their interest rates and extending loan maturities, as well as helping them to buy back their bonds.
The meeting failed, however, to resolve the continuing dispute over private sector involvement in a second bailout for Greece, and over whether Europeans should run the risk of their rescue being declared a selective default by the bond rating agencies.
That argument has put Germany — which is seeking a substantial role for private investors — at odds with the European Central Bank, which wants to avoid the risk of a new Greek bailout being declared a default, thereby spreading further alarm in the market.
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