Financial Times
September 26, 2011
The Brady plan that rescued Latin American countries in the 1990s from their debt crisis cannot be applied to the eurozone, according to the architect of the programme.
Nicholas Brady, a former US Treasury secretary, told the Financial Times that eurozone countries such as Greece and Portugal lacked the economic growth needed for such a plan and none of the solutions proposed so far involved real debt reduction.
A European version of the Brady plan has been suggested as a means of ending the eurozone sovereign debt crisis by figures including US economist Barry Eichengreen and Kenneth Rogoff, a former IMF chief economist.
The Brady plan was launched seven years after the Latin American crisis erupted in 1982 and involved investors suffering losses on bonds from countries such as Brazil, Mexico and Uruguay. New so-called Brady Bonds were issued, backed by US Treasury bonds that paid no interest.
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