Paris (MNI) – Charles Dallara, managing director of the Institute
of International Finance, said Monday that any effort to unilaterally
force banks to take a specific haircut on their Greek debt holdings
would be tantamount to a Greek default.
“Any approach that is not based on cooperative discussions and
involves unilateral actions would be tantamount to default, would
isolate the Greek economy from international capital markets for many
years and would impose a harsh burden on the Greek people as well as
European taxpayers” Dallara said in a statement.
Such a move would also likely have “severe contagion effects, which
would cost the European and the world economy dearly in terms of
employment and growth.”
Dallara’s comments come amid intense pressure on banks from Germany
and other Eurozone members to cut the value of the Greek debt they hold
by 50% or more. EU leaders have adopted a “take it or leave it stance”
on the issue, an EU source said over the weekend, implying that
governments will force a mandatory haircut on Greek debt if they need
to.
The IIF, which represents the world’s largest banks, said talks on
a new PSI on Greek debt continued Monday in Brussels.
In his statement, Dallara said that the group continued to “explore
options which could contribute to a realistic vision of the Greek
economy leading to renewed growth and investment, while also preserving
the fundamental essence of a cooperative approach.”
But he added that there were “limits, however, to what could be
considered as voluntary to the investor base and to broader market
participants.”
Dallara said that the IIF remained “in constant contact with the
Greek authorities and the Greek banks” in the negotiations and that it
was “committed to the search for contructive solutions.”
— Paris newsroom, +331-42-71-55-40; jduffy@marketnews.com
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