The European Central Bank (ECB) is in danger of biting off more than it can handle, warns expert Kai Schaffelhuber, a partner at law firm Allen & Overy, whose firm was involved with the daunting task of confronting Greeceās 2012 debt restructuring.
Schaufelhuber has issued the ECB a dreary warning predicting that if it goes ahead and increases the amount of a country’s bonds available to be bought under its economic stimulus program, the ECB might find itself in a position where it buys more than a third of a country’s debt, making restructuring of privately held bonds more difficult.
The problem that is on Schaufelhuber’s and other European authorities radar is stemming from the 2012 financial crisis and the expectations that in order to keep to its quantitative easing program, the ECB will need to raise the limits on its bond purchases.
ā(The ECB) should avoid a situation where they are holding so much debt that a restructuring becomes virtually impossible,” Schaffelhuber warned.
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