A letter to the FT from Prof Jean Pisani-Ferry and others
Financial Times
September 27, 2011
Sir, Strong and co-operative policy action inspired by clear views about the future shape of the euro area is needed now. As French and German economists, we agree on a number of steps that should be taken now.
The very limited Greek debt reduction proposed on July 21 is inadequate. Bondholders should take a cut of about half on their outstanding Greek government bond portfolios.
To ensure stability, this debt restructuring process could be combined with an offer to exchange Greek sovereign bonds for securities issued by the European financial stability facility.
Every Greek bond with a nominal value of €100 could be exchanged for an EFSF bond worth €50 (say). The outstanding volume of Greek debt would consequently be transferred to the EFSF’s portfolio.
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