Lessons from the 2012 Greek debt restructuring
Miranda Xafa, 25 June 2014
The 2012 Greek debt restructuring was the largest one in the history of sovereign defaults. This column discusses the lessons from this historically unprecedented episode. Delaying the restructuring implied that externally held debt remained higher than it would have been otherwise. Supportive crisis management is necessary for smooth restructuring to take place in a currency union.
The 2012 Greek debt exchange and subsequent buyback was a key episode in the Eurozone debt crisis (Wyplosz 2010, 2013). It was the largest debt restructuring in the history of sovereign defaults, and the first within the Eurozone.
Topics: Europe's nations and regions, Macroeconomic policy
Tags: debt restructuring, Greek debt
Debt-for-equity swaps offer Greece a better way
Peter Allen, Barry Eichengreen, Gary Evans, 28 February 2014
Greece needs debt reduction. This column argues that instead of offering another lengthening of maturities and reduction in interest rates, Eurozone leaders should seize the occasion and implement debt-for-equity swaps that would encourage foreign investment, speed privatisation and jumpstart the Greek economy.
Last week, Eurogroup finance ministers in their wisdom decided that there would be no debt relief or restructuring for Greece until the end of the summer. Evidently they wish to avoid exciting voters in the European Parliament elections in May.
Topics: EU institutions, International finance
Tags: debt-equity swaps, Greece, greek crisis, Greek debt
Massacre memories: German car sales and the EZ Crisis in Greece
Vasiliki Fouka, Hans-Joachim Voth, 23 October 2013
The EZ crisis increased north-south conflicts between bailout providers and recipients – especially between Germany and Greece. This column shows evidence that political conflict directly translated into losses of market share for German car producers in Greece – especially in areas where German armed forces committed massacres during World War II. Six decades later, memories of conflict are never far from the surface in Europe.
When Angela Merkel visited Athens earlier this year, local protesters upset about austerity measures and alleged German dominance depicted her on placards wearing a Nazi uniform. Cypriots demonstrating against the terms of their country's bailout showed the stars of the EU surrounding a swastika.
Topics: Europe's nations and regions, Global crisis
Tags: eurozone, Greek debt
Messing up the next Greek debt relief could endanger the Eurozone
Charles Wyplosz, 23 September 2013
Greece is in dire straits; it will need more debt relief. This column argues that Greece is suffering because northern EZ countries kicked the can down the road by forcing crisis countries to borrow rather than restructure their debts early on. It is time for the ‘generous’ lenders to face the consequences of their short-sightedness. The bad news that Chancellor Merkel ought to break now to her people is that official debt restructuring is inevitable.
The situation in Greece is so disastrous that some form of debt relief is likely. The timing is right as Germany’s electoral ‘purdah’ period has ended.
Topics: EU institutions, Macroeconomic policy
Tags: debt rescheduling, Greek debt
The logic and fairness of Greece’s programme
Olivier Blanchard, 23 March 2012
The Greek package has cheered up markets. In this column, the IMF’s Chief Economist Olivier Blanchard argues that the programme deals squarely with the two most fundamental issues facing Greece – high debt and low competitiveness. And it is also fair, asking for sacrifices of both Greece and its creditors.
To get back to health, Greece needs two things. First, a lower debt burden. Second, improved economic competitiveness. The new programme addresses both.
Topics: EU institutions, Europe's nations and regions
Tags: Eurozone crisis, Greek debt