FRANKFURT (MNI) – Institutionalizing private sector involvement in
sovereign debt restructuring would undermine demand for Eurozone debt,
Institute of International Finance (IIF) Managing Director Charles
Dallara said Friday.
“Voluntary private sector involvement makes sense in Greece and
nowhere else,” Dallara told reporters on the sidelines of the European
Banking Congress.
Institutionalizing PSI as part of Eurozone reform would undermine
demand for Eurozone debt and “that is the last thing that we need,”
Dallara warned.
“Schaeuble and other European leaders must draw the line here,” he
asserted.
The IIF, under Dallara, is currently negotiating with Greece on
behalf of banks for a deal that would reduce the nominal value of
privately-held Greek sovereign bonds by 50%.
Dallara also said that neither debt restructuring nor a private
sector involvement in it would be necessary in other European countries,
because the mismanagement of Greece was absolutely unique in Europe.
On Thursday, Dallara said that private creditors expect to reach a
deal with Greece on a 50% haircut within weeks, and that an exchange of
old bonds for new ones would take place early in 2012.
–Frankfurt newsroom +49 69 72 01 42; e-mail: frankfurt@marketnews.com
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