Possible euro debt solution: Partial Greek default, $3 trillion bailout
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Adriene Hill: One of the big problems trying to fix the European debt crisis has been trying to come up with a solution that makes all 17 eurozone countries happy. After weekend meetings of some of the world’s finance ministers, there are reports — rumors — whispers — of a solution.
For more, we go to the BBC’s Andrew Walker in London. Good morning Andrew.
Andrew Walker: Good morning.
Hill: What do we know about this plan right now?
Walker: We don’t know anything for sure — but what we’re hearing is suggestions that a deal is being put together which involves three key elements. One is a 50 percent default by Greece on its government debt — something that’s been denied by the Greek government, but nonetheless, we are hearing that. Recapitalization of European banks — that’s extra money to help them cope with any losses they may suffer. And using the European Central Bank to boost the effective firepower of the European Union’s bailout fund — something called the European Financial Stability Facility — so that it has a total effective firepower of something like 2 trillion euro, something like $3 trillion.
Hill: Now, this has been dragging on for months, and we’ve heard a ton of ideas. Why is the market seem to be responding so positively to this one?
Walker: Well the markets do seem to latch onto almost anything briefly and give it a bit of a welcome if it looks like it’s moving in what they would regard as the right direction. But think maybe there is a difference with this one. And that is, we’ve had lots of little piecemeal things. This does look like — at least it’s intended — to grapple with all the main, fundamental aspects of the crisis.
Hill: The BBC’s Andrew Walker. Thanks so much.
Walker: My pleasure.
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