The PADRE plan: Politically Acceptable Debt Restructuring in the Eurozone
Pierre Pâris, Charles Wyplosz 28 January 2014
The Eurozone will either struggle for decades with very high public debts, or it will restructure. This column introduces a new Geneva Special Report on the World Economy arguing that the restructuring option is workable and preferable. The plan – dubbed PADRE – would substantially lower EZ nations’ debts without cross-nation transfers and with limited moral hazard. The financing is simple. Each EZ member’s debt is reduced by the securitisation of its own share of ECB seignorage.
Europe has a problem with debt (European Commission 2013). CEPR and the International Center for Monetary and Banking Studies (ICMB) have just released a new report that fleshes out a plan for restructuring the debt (Pâris and Wyplosz 2014).
EU institutions International finance Macroeconomic policy
EZ debt restructuring, PADRE