Executives and officials are meeting in Davos, Switzerland, as bond markets show signs of stabilising after the European Central Bank last month pumped three-year emergency funding into a banking system that was in danger of seizing up. At the same time, governments, investors and the International Monetary Fund are split on how to restructure Greek debt less than two months before a potential default.
IMF Managing Director, Christine Lagarde, said delegates warned it’s too soon to sound the all clear on Europe, even after the ECB’s decision to pump emergency cash into the banking system staved off a bond market rout in the region.
The ECB’s measures “have relieved the liquidity problems of European banks but didn’t cure the financing disadvantages highly indebted countries suffer”, billionaire investor, George Soros, told reporters in Davos today. “Half a solution isn’t enough.”
IMF Managing Director Christine Lagarde said today that Greece’s “public creditors” will have to participate with investors. Two people familiar with the stance of the ECB’s Governing Council said the central bank is opposed.
Europe’s drive to end the crisis has hit a snag as governments and investors struggle to reach an accord over how to cut Greece’s debt levels. European officials are demanding that private bondholders take deeper losses, while banks argue that all holders of Greek debt, both public and private, should contribute. Failure to reach agreement could mean Greece will struggle to make a bond payment on March 20.
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