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Finance Minister Yanis Varoufakis, in London to reassure private investors that he was not seeking a showdown with Brussels over a new debt agreement, said the new left-wing government would spare privately held bonds from losses, a source told Reuters.
The reported proposals, which included a pledge to reform the Greek economy, contrast sharply with the government's strident vows in Athens last week to ditch the tough austerity conditions imposed under its existing bailout.
Late on Monday, Varoufakis issued a statement saying that comments of his to financial investors had been misinterpreted. He gave no details but he was widely reported in Greek media to be backing down from the government's aim of reducing the debt.
"The government and the finance minister will not back down, irrespective of how grieved some people are by our determination," he said in the statement.
It was not clear whether the proposals would be accepted by European heavyweight Germany, which opposes softening the terms.
Varoufakis had not discussed the swap with officials from its European Union or European Central Bank creditors, said the source, who had direct knowledge of the plans but would not be named due to the sensitivity of the issue.
The finance minister also said he had not put a value on the swap, the source said, calling it a "work in progress".
"These bonds held by the ECB right now can be restructured. It's possible to turn it into perpetual bonds to be serviced, or growth-linked debt," said the source. "It's the same with a proportion of the other bilateral bonds held by the official sector."