Eurozone central banks may decide to roll over their holdings of Greek state debt to reduce by €5.6 billion the amount governments will need to provide Athens by 2016.
Such a move would cut the amount to €2 billion from €7.6 billion. Greece would need to get €1.8 billion in extra financing in 2012-2014 and another €5.8 billion between 2015 and 2016 -- a total of €7.6 billion. If the eurozone's 17 national central banks, which together form the Eurosystem, decide to replace the Greek bonds they hold with new Greek paper as the debt matures, it would save Greece the need to redeem €3.7 billion in 2012-2014 and €1.9 billion in 2015-2016.
The roll-over idea is separate from the issue of the European Central Bank returning profits to Athens from the Greek bond portfolio it has acquired under its Securities Market Programme (SMP). That will reduce the financing needs of Greece by €4.1 billion in 2012-2014 and another €3.0 billion in 2015-2016.
This assumes that all the profits from the SMP portfolio of bonds would be returned, but this is not completely decided yet. Bundesbank President Jens Weidmann said earlier on Thursday it would be up to the German parliament to decide what to do with the German share of the SMP profits. This return of all the profits -- along with cutting interest on eurozone loans to Greece, a deferral of interest payments, maturities extension, and several other measures -- allowed the eurozone to cut the amount of new lending to Greece until 2016 to €7.6 billion from €32 billion.
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