Ahead of a make-or-break summit of European leaders on October 23, at which a comprehensive new Franco-German crisis plan is expected to be discussed, four eurozone officials told Reuters that a "haircut" of between 30 and 50 per cent for Greece's private creditors was under consideration.
That is far more than the 21 per cent loss they had asked banks, pension funds and other financial institutions to accept in July as part of a second rescue package for Athens. Since then, the Greek economy has sunk deeper into recession, fanning fears of an outright default and forcing eurozone leaders to consider more radical action to stem their crisis. To restore confidence in the banking system, they are also working on plans to shore up the balance sheets of banks through recapitalisations.
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