Papandreou Says German Proposals May Lead Countries To Default
Germany΄s proposals that lenders should share the burden of any euro zone sovereign debt default could lead some economies toward bankruptcy, Greek Prime Minister George Papandreou said on Monday, Reuters reports.
"It created a spiral of higher interest rates for countries that seemed to be in a difficult position, such as Ireland or Portugal," Papandreou said during a visit to Paris.
"This could create a self-fulfilling prophecy ... This could break backs. This could force economies towards bankruptcy."
Moody’s shares this opinion, as in its weekly credit outlook it notes the concerns on these proposals "are likely to negatively affect market access and funding costs for European sovereigns."
"Longer term, this will increase the cost of borrowings for weaker sovereigns and increase differentiation among EU sovereign borrowers, similar to what΄s occurred in the banking sector," the rating agency said.
(Capital.gr)