Charles Wyplosz, Saturday, February 8, 2014

Charles Wyplosz talks to Viv Davies about the recent Special Geneva Report, ‘The PADRE Plan: politically acceptable debt restructuring in the Eurozone’, co-authored with Pierre Pâris and published jointly by CEPR and ICMB. Wyplosz explains how debt restructuring can be managed in a safe way, why it would not have an inflationary effect and how moral hazard could be mitigated, if not eliminated. The interview was recorded in January 2014.

Pierre Pâris, Charles Wyplosz, Tuesday, January 28, 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.