Greek default plan ‘on eurozone agenda amid Italy fears’

11 July 2011 | By Gary Jackson

The planned meeting will discuss a new strategy for the bailout of the debt-hit country, although it is suggested the French-proposed plan of banks rolling over their Greek debt will be scrapped.

A senior European official involved in the ongoing negotiations told the Financial Times that the “basic goal” of the strategy is to lower Greece’s debt burden through both public and private sector action.

“There’s some convergence in the banking community towards a more realistic plan than the French plan, which was out of this world,” the official adds.

The newspaper suggests that a German-led plan to get holders of Greek debt to exchange these holdings for longer-maturing bonds could be the preferred option of ministers, which would take French Brady bond-style proposal off the table.

The move comes as European Union (EU) officials attempted to stave of rumours that Italy is the focus of new emergency talks.

At the weekend, Herman Van Rompuy, the president of the European Council, called a meeting of EU officials to discuss the continued sovereign debt problems of the eurozone.

The meeting will be attended by Rompuy, Jean-Claude Trichet, the president of the European Central Bank, European Commission president Jose Manuel Barroso, Olli Rehn, the European economic and monetary affairs commissioner, and Jean-Claude Juncker, chairman of the region’s finance ministers.

Although Rompuy’s spokesman denied ministers are attending a crisis meeting, the gathering comes amid speculation that Italy could be the next country to call for help from the international community to meet its debt commitments.

Sources told a number of publications, including the New York Times and Reuters, that the problems of Italy as well as Greece will on the agenda of the meeting.

To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here and Follow @fundweb