Saturday, 7 May 2011

Rumours and fears about Greece

 I recently spoke about Portugal's bail-out from the EU and IMF. I also mentioned that Portugal is the third eurozone country to look for help from the EU after Greece and the Irish Republic.

Finance ministers from an inner core of eurozone countries (Germany, France, Italy, Spain and Greece) are thought to have held secret talks in Luxembourg Friday night to discuss a possible debt restructuring Greece.

It is thought that negotiations centred on the mounting eurozone debt crisis, and included not just Greece but the terms of Portugal's bailout and Ireland's demands for easier repayment terms on its loans.
A restructuring of Greek debt, which would see the terms of the loans extended and borrowing rates reduced, is understood to have been central to the talks.

Last year, Greece borrowed €110bn (£95bn) then Ireland followed by accepting  €67.5bn and Portugal agreed in principle to an €80bn deal. 

It was suggested that creditors were looking at a range of options for Greece including a fresh bailout, giving it longer to repay its debts or forcing banks to take a loss on Greek bonds.

It all got a bit crazy when German magazine Der Spiegel reported that the meeting was about Greece readopting its own currency. Due to this, the euro has fallen by 1% to the dollar.

After the talks the Eurogroup Chairman Jean-Claude Juncker issued a categorical denial, "We have not been discussing the exit of Greece from the euro area, this is a stupid idea, it is in no way... an avenue we would never take," Reuters reported him as saying.

Despite full denial from Greece that they plan to leave the euro, the euro still took a hit and was worth $1.44 last night!

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