Bank lobby rejects reopening deal on Greek debt
Associated Press
WASHINGTON
The international-bank lobbying group that has been leading negotiations on giving debt-ridden Greece easier terms for its bonds on Sunday rejected calls to impose larger losses on private investors.
Forcing private creditors to write down their Greek- bond holdings by more than the 21 percent tentatively agreed to in a July deal would quickly cause a “domino effect” that would see the crisis spread to other parts of Europe, warned Josef Ackermann, the outgoing chairman of the Institute of International Finance.
Such a move ultimately would cost taxpayers much more than just bailing out Greece and erode confidence in the euro, said Ackermann, who also is the CEO of Germany’s Deutsche Bank, a major lender to Greece.
Germany and other rich eurozone nations have been pushing for a re-negotiation of the July deal, arguing that the economic situation in Greece has deteriorated significantly since then and may require a steeper cut in the country’s debt load.
However, Ackermann quickly rejected that push, saying that the agreement was fair and already placed a heavy burden on banks at a time of major market turmoil.
“If we now start reopening this Pandora’s box, we will lose a lot of time, and I’m not sure people would be willing to participate,” Ackermann told a news conference on the sidelines of the annual meeting of the International Monetary Fund.