What Is Debt Reduction?

Greece's 2 billion euros of national debt are due, and repayment and default pressures are coming again, but for Greece, the euro area may decide this week to write down its debt significantly. Analysts pointed out that this move will greatly affect the already insufficient liquidity of the European banking industry, and new measures will be needed to "make up blood" for the banking industry.

Debt write-down

Right!

Greece's 2 billion euros of national debt are due, and repayment and default pressures are coming again, but for Greece, the euro area may decide this week to write down its debt significantly. Analysts pointed out that this move will greatly affect the already insufficient liquidity of the European banking industry, and new measures will be needed to "make up blood" for the banking industry.

Chinese name

Debt write-down

Area

Eurozone

Field

economic

Subject

finance

Said that discussions within the euro area

Several European banks have made it clear

Can withstand a write-down of up to 30% of Greek debt held, and strongly opposes the extent of the write-down to 40% to 50%. CEO of Deutsche Bank

In view of the repeated downgrades of the euro zone countries such as Italy and Spain, and the continuing deterioration of the economic situation in developed countries, Lagarde, president of the International Monetary Fund (IMF), proposed last weekend that the institution should be Capital increase. Some participating emerging market countries have proposed to invest $ 350 billion in the IMF to expand its rescue capabilities. Lagarde also emphasized that the funds held by the IMF need to reach a "suitable level" in order to meet the needs of member countries according to the actual development, but she did not disclose the scale of the IMF's capital increase.

Although this proposal was supported by the euro zone countries and the BRIC countries, it also met with opposition from the United States, Canada and Australia. Geithner has previously stated that the IMF now has US $ 380 billion in funding and that sufficient capital does not require capital increase. Although the IMF played an important role in the European debt crisis, as the Australian Treasury Secretary Swan said: "Europeans should first take care of themselves."

As the host of the G20 summit, France, in order to successfully host, proposed a three-step European debt crisis roadmap to stabilize market confidence. The first step is to encourage the European banking industry to recapitalize, and the source of funds can be obtained through the private sector and the government sector. The second step is to restructure Greece s debt more significantly and increase the proportion of private investors write-down of Greek bonds. To increase the flexibility and efficiency of European financial stability tools. Some bank analysts believe that, even with a specific rescue plan, this process will definitely take a long time.

Analysts bet the final feasible rescue plan on the European Financial Stability Instrument (EFSF) with a size of 440 billion euros. They proposed to use it to buy the government bonds of the troubled countries in the secondary market, and then use these government bonds as collateral to flow through the European Central Bank. It borrows money from the European Central Bank during the sexual operation and acts as a bank.

According to informed officials on the 15th, euro zone finance officials are discussing authorizing the EFSF to guarantee 25% of the face value of the bonds. The move is intended to give the EFSF the ability to help Italy, the third largest economy in the euro area, and Spain, the fourth largest economy in the euro area.