This Policy Brief by Christian Kopf examines the merits of a new proposal from France aimed at resolving the Greek debt crisis in which French commercial banks would swap €85.5 billion in Greek government bonds maturing between 2011 and 2014 into a combination of new long-term Greek bonds with principal guarantee and cash payments. In spite of finding several shortcomings, the author concludes that the proposal is a good starting point in the design of a solution for Greece, as it acknowledges the need for private sector involvement in dealing with the country’s sovereign debt overhang.
Christian Kopf is Director of Economic Research and Investment Strategy, Spinnaker Capital