Nikos Chountis, a Member of the European Parliament for the major opposition SYRIZA party, questioned Olli Rehn, the European Commissioner in charge of monetary affairs, about the conditions surrounding the Eurozone’s agreement to release $56.7 billion in new bailout loans for Greece.
Chountis asked about the measure in which in order for Greece to lower its debt, private investors must buy buy bonds at a price that would force them to take losses again. Chountis asked whether the new haircut in the value of yield bonds would mean that pension funds will lose another big part of their reserves or not and how this procedure will be funded.
Greek pension funds took a big hit under a previous government imposition of big losses on investors, as did universities. The Bank of Greece, where the money were deposited, turned the reserves to yield bonds and it applied the haircut without the knowledge or approval of the Greek universities, who lost 60-80 percent of their holdings, leaving some unable to even buy heating oil.
Rehn said the bond buyback program was critical for Greece to further relieve its crushing debt burden and that the monies needed for Greece to buy its bonds back at 30 percent of their value would come from Eurozone emergency funds. Greek Finance Minister Yiannis Stournaras said the program was voluntary, but Greek banks are balking at taking part.
(Sources: European Commission, imerisia.gr)