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Greek Debt Summit Expected Next Week
By MARCUS WALKER
BERLIN—Euro-zone leaders are expected to hold an emergency summit on the Greek debt crisis in the second half of next week, according to senior European officials.
The summit will aim to approve a plan for private-sector involvement in a new bailout package for Greece at the summit, these officials say, in an attempt to resolve mounting uncertainty over the Greek and euro-zone debt crisis that is roiling global financial markets.
Senior officials from euro-zone countries are rushing to complete technical negotiations in coming days so that leaders can approve a blueprint for private-sector involvement in the Greek package. The blueprint will aim to reduce Greece's debt burden, which most euro-zone policy makers now privately accept is unsustainable.
Germany, which has been pushing hardest for some form of private-sector burden-sharing, has been publicly skeptical about the point of holding an early summit. But German officials privately accept that EU authorities in Brussels "very likely" send out invitations to the summit, possibly at the weekend.
The plan for private-sector involvement may offer banks a choice between different forms of involvement in the Greek bailout, such as a bond exchange or a bond buyback, people familiar with the matter say. In either case, bondholders would be expected to take a writedown on their Greek debt if they haven't done so already.
The extent of the resulting debt relief for Greece isn't clear. European leaders may only sign off on an outline, leaving officials to finalize the details in coming weeks, including in talks with banks.
But the summit is expected to take a decision on the methods for involving investors. "The question is how, not whether" there will be private-sector involvement, says a senior European official.
The European Central Bank, which strongly objects to private-sector involvement out of fear that it could cause a wider financial panic, has been marginalized in recent days as national governments of the euro zone have moved towards a consensus that bondholders will be asked to contribute.
Most if not all euro-zone governments now accept that the plan for involving bondholders will probably trigger a "selective default" on Greek debt, people familiar with the matter say.
(The Wall Street Journal)
By MARCUS WALKER
BERLIN—Euro-zone leaders are expected to hold an emergency summit on the Greek debt crisis in the second half of next week, according to senior European officials.
The summit will aim to approve a plan for private-sector involvement in a new bailout package for Greece at the summit, these officials say, in an attempt to resolve mounting uncertainty over the Greek and euro-zone debt crisis that is roiling global financial markets.
Senior officials from euro-zone countries are rushing to complete technical negotiations in coming days so that leaders can approve a blueprint for private-sector involvement in the Greek package. The blueprint will aim to reduce Greece's debt burden, which most euro-zone policy makers now privately accept is unsustainable.
Germany, which has been pushing hardest for some form of private-sector burden-sharing, has been publicly skeptical about the point of holding an early summit. But German officials privately accept that EU authorities in Brussels "very likely" send out invitations to the summit, possibly at the weekend.
The plan for private-sector involvement may offer banks a choice between different forms of involvement in the Greek bailout, such as a bond exchange or a bond buyback, people familiar with the matter say. In either case, bondholders would be expected to take a writedown on their Greek debt if they haven't done so already.
The extent of the resulting debt relief for Greece isn't clear. European leaders may only sign off on an outline, leaving officials to finalize the details in coming weeks, including in talks with banks.
But the summit is expected to take a decision on the methods for involving investors. "The question is how, not whether" there will be private-sector involvement, says a senior European official.
The European Central Bank, which strongly objects to private-sector involvement out of fear that it could cause a wider financial panic, has been marginalized in recent days as national governments of the euro zone have moved towards a consensus that bondholders will be asked to contribute.
Most if not all euro-zone governments now accept that the plan for involving bondholders will probably trigger a "selective default" on Greek debt, people familiar with the matter say.
(The Wall Street Journal)
