Meltdown fears for euro as G20 makes plans for Athens to default on debt

Saturday, September 24, 2011
By Paul Martin

Finance Minister signals Greece may opt for 50 per cent writedown on bonds as top economist warns Spain and Italy could be forced out of single currency

By Ben Chu in Washington and Margareta Pagano in London
Sunday, 25 September 2011

The world’s leading economic powers are moving towards an acceptance that Greece will default on up to half of its €350bn sovereign debts, according to reports from meetings in Washington yesterday. They are believed to be working on concrete plans to deal with these huge losses and their repercussions.

This news – almost regardless of any words of qualification that emerge this weekend – will have a resounding effect on the febrile markets when they open on Monday.

Unconfirmed reports circulated yesterday that G20 leaders have recognised that the Athens government cannot cope with the scale of its debt burden and that there will eventually need to be a considerable reduction in the face value of Greek debt. The Finance Minister, Evangelos Venizelos, was quoted by two Greek newspapers as suggesting that a 50 per cent writedown for the holders of Greek bonds would be the “best option”.

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