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TwitterPutting Germany at odds with the European Central Bank and the French government, Berlin has proposed extending the maturities on Greek bonds by seven years, insisting that private investors must share in the cost of any fresh financial aid to Greece.
The German finance minister, Wolfgang Schauble, in a letter to his European counterparts as well as to the International Monetary Fund, the ECB, and the European Commission, which will meet June 20 to discuss aid, wrote: “Any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors and has to help foster the Greek debt sustainability.’’
Schauble added that any deal to support Greece at the meeting would have to “lead to a quantified and substantial contribution of bondholders to the support effort’’ and would “best be reached through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years.’’ The letter was dated Monday and released yesterday.
Richard McGuire, a strategist at Rabobank in London, said the letter highlighted a division among the core members of the euro zone as well as with the central bank. As a result, he said, there is “the clear risk a Greek deal could well hit a snag.’’ That risk was underscored yesterday by a report from the IMF, the European Union, and the ECB monitoring Greece’s progress at meeting its goals for receiving a $160 billion bailout.
The report said that Greece could not receive the next installment this month until a plan to meet the country’s financing needs for 2012 is worked out, Bloomberg News reported from Berlin. Greece’s financing costs remain “prohibitive,’’ the report said, making it impossible for Greece to return to markets next year as planned under the three-year rescue program.
Germany’s latest position on extending debt maturities will probably gain support from countries like Finland and the Netherlands, which have taken a tough line on any new aid to Greece, seeking to win over skeptical public opinion at home.
The plan is likely to run into opposition from several other eurozone governments, however, and frustrate the ECB, which has been positioning itself against moves to require private bondholders to book some losses on their holdings, in part because of the hefty holdings of Greek debt that the ECB itself is carrying.
While France has consistently stood against private-sector involvement in the bailout of Greece, Germany’s position has fluctuated. Previously, Berlin proposed a milder plan to stretch out Greece’s debt at the expense, in part, of existing bondholders but backed away after the ECB vehemently objected.
The German finance minister, Wolfgang Schauble, in a letter to his European counterparts as well as to the International Monetary Fund, the ECB, and the European Commission, which will meet June 20 to discuss aid, wrote: “Any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors and has to help foster the Greek debt sustainability.’’
Schauble added that any deal to support Greece at the meeting would have to “lead to a quantified and substantial contribution of bondholders to the support effort’’ and would “best be reached through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years.’’ The letter was dated Monday and released yesterday.
Richard McGuire, a strategist at Rabobank in London, said the letter highlighted a division among the core members of the euro zone as well as with the central bank. As a result, he said, there is “the clear risk a Greek deal could well hit a snag.’’ That risk was underscored yesterday by a report from the IMF, the European Union, and the ECB monitoring Greece’s progress at meeting its goals for receiving a $160 billion bailout.
The report said that Greece could not receive the next installment this month until a plan to meet the country’s financing needs for 2012 is worked out, Bloomberg News reported from Berlin. Greece’s financing costs remain “prohibitive,’’ the report said, making it impossible for Greece to return to markets next year as planned under the three-year rescue program.
Germany’s latest position on extending debt maturities will probably gain support from countries like Finland and the Netherlands, which have taken a tough line on any new aid to Greece, seeking to win over skeptical public opinion at home.
The plan is likely to run into opposition from several other eurozone governments, however, and frustrate the ECB, which has been positioning itself against moves to require private bondholders to book some losses on their holdings, in part because of the hefty holdings of Greek debt that the ECB itself is carrying.
While France has consistently stood against private-sector involvement in the bailout of Greece, Germany’s position has fluctuated. Previously, Berlin proposed a milder plan to stretch out Greece’s debt at the expense, in part, of existing bondholders but backed away after the ECB vehemently objected.
