A debt restructuring in Greece and in Portugal “could blow the entire Eurozone up,” due to the big losses that it would bring to the creditors, warned German economist Peter Bofinger, in an interview with Berliner Zeitung.
“The European banks hold claims worth more than three billion euros,” he said, and as an alternative solution proposed the issuance of Eurobonds or the imposition of lump sum tax on large properties. “All these are preferable to the haircut,” a writing down of debt by imposing losses on public creditors, he said.
Moreover, the President of the Centre for European Economic Research, Clemens Fuest, in an interview with German Radio, claimed that restructuring won’t help Greece and that more reforms are better.
“Ultimately, the issue is that Greece should proceed to the reforms and to the austerity measures to which it was committed from the beginning and the developments on this are very few,” he said.
But he said that in the long run, “The creditors will have to go to the government in Athens and to serve it, as the debt, as it is today, cannot be financed for a long time.” Fuest said he does not consider that Greece’s exit from the Eurozone could be a solution, as it would plunge the country into a deeper recession.
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