Eichengreen on debt restructuring (ls)

Find the article here. He sketches out how a restructuring of Greek debt can be carried out while the potential for systemic risk remains contained.

Key points:

• Greece needs to default on its existing bonds and replace it by new ones carriying a significant haircut. The ongoing losses for creditors should be tax deductible in order to limit the impact on banks' profits.
• The ECB could offer favourable collateral rules concerning these new bonds.
• Accounting rules should be modified in a way which allows banks to stretch their losses over an extended period.