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Fears of Greek debt default increase
Source: Agencies |
September 24, 2011, Saturday
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TALK of a possible Greek default gained pace yesterday, while a pledge by the world's major economies to prevent Europe's debt crisis from undermining banks and the global economy failed to lift financial markets for long.
Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying an orderly default with a 50 percent haircut for bondholders was one of three possible scenarios for resolving the heavily indebted eurozone nation's fiscal woes.
Officials played down the reports and Venizelos described them as an unhelpful distraction from the central task of sticking to Greece's EU/IMF bailout program.
European Central Bank governing council member Klaas Knot told a Dutch daily a Greek default could no longer be ruled out, the first ECB policymaker to speak openly of the prospect. "It is one of the scenarios," Dutch daily Het Financieele Dagblad quoted him as saying.
"I am now less certain in excluding a bankruptcy than I was a few months ago," Knot said, adding that he wondered "whether the Greeks realize how serious the situation is."
More signs emerged yesterday that European governments are working on recapitalizing vulnerable banks, with France's top market regulator saying 15 to 20 banks needed extra capital, although no French ones "at this stage.
European shares fell again, leaving them on course for a fifth straight month of losses. A commitment from G20 finance ministers and central bankers, issued after G20 talks in Washington, to "take all necessary actions to preserve the stability of the banking system and financial markets as required" failed to placate investors.
Finance officials from the so-called BRICS countries, including heavyweights China, Brazil and India, said they would consider giving more funds to the IMF to boost global stability.
Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying an orderly default with a 50 percent haircut for bondholders was one of three possible scenarios for resolving the heavily indebted eurozone nation's fiscal woes.
Officials played down the reports and Venizelos described them as an unhelpful distraction from the central task of sticking to Greece's EU/IMF bailout program.
European Central Bank governing council member Klaas Knot told a Dutch daily a Greek default could no longer be ruled out, the first ECB policymaker to speak openly of the prospect. "It is one of the scenarios," Dutch daily Het Financieele Dagblad quoted him as saying.
"I am now less certain in excluding a bankruptcy than I was a few months ago," Knot said, adding that he wondered "whether the Greeks realize how serious the situation is."
More signs emerged yesterday that European governments are working on recapitalizing vulnerable banks, with France's top market regulator saying 15 to 20 banks needed extra capital, although no French ones "at this stage.
European shares fell again, leaving them on course for a fifth straight month of losses. A commitment from G20 finance ministers and central bankers, issued after G20 talks in Washington, to "take all necessary actions to preserve the stability of the banking system and financial markets as required" failed to placate investors.
Finance officials from the so-called BRICS countries, including heavyweights China, Brazil and India, said they would consider giving more funds to the IMF to boost global stability.
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