German Finance Minister Wolfgang Schäuble ruled out public investors accepting a debt restructuring, or "haircut", on their Greek bonds but said that a debt repurchasing programme could be considered.
Schäuble said sovereign states could not legally write off billions of euros of losses on their official holdings of Greek government bonds. With frustration rising over a worsening recession and tough austerity reforms, Greek Finance Minister Yannis Stournaras said Athens was seeking a form of haircut by reducing the interest and extending the maturities of its bailout loans.
Schäuble reiterated that no agreement had been made on how to help Greece implement austerity cuts after Stournaras said international lenders had given Athens more time and a package of austerity measures would be put to parliament next week.
Any agreement with near-bankrupt Greece would have to be sustainable - last longer than six months - and be trusted by financial markets. A deal on the package is crucial for Greece's efforts to unlock more aid under its latest bailout, with the country just three weeks away from running out of cash.
Schäuble also said an agreement with Greece could include ideas such as cutting aid if spending went out of bounds. "All those kinds of things - a control mechanism, a corrective mechanism - could perhaps restore the credibility we haven't so far reached for the Greek programme", he said.
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