The EU, the European Central Bank and the International Monetary Fund should slash interest rates on the Greece debt they hold to give the near-default nation a fighting chance to recover, the head of the Institute of International Finance said Thursday.
IIF Managing Director Charles Dallara also said that the ECB should offer its bond-buying program to Ireland and Portugal and that euro-zone officials must reorient their focus away from short-term targets in bailout countries and towards the longer-term economic overhauls vital to restoring growth.
Mr. Dallara’s comments came as the IMF is set to downgrade growth expectations around the world and warn against the escalating risk of another global recession, largely on the back of the euro crisis. IMF Managing Director Christine Lagarde has also urged euro-zone officials in recent days to address Greece’s debt.
The IIF represents more than 400 of the world’s largest private banks, insurers and other financial firms and negotiated a 200 billion euros restructuring of privately held Greek debt.
If Greece’s official creditors cut their interest rates to 1% from an average of around 4% now, the lenders could change the profile of the country’s debt burden and still make money, IIF Chief Economist Philip Suttle said.
(source: WSJ)
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