European Shadow Financial Regulatory Committee (ESFRC) (2015) : Escalating Crisis in the Eurozone: The Case for Conditional Debt Relief for Greece (Statement No. 40)

Authors

David Veredas, Universite Libre Brussels
Niels Thygesen, University of Copenhagen
Tom Berglund, Hanken School of Economics
Reinhard H. Schmidt, Goethe University
Franco Bruni, Bocconi University
Harald Benink, London School of Economics
Kern Alexander, University of Zurich
Santiago Carbo-Valverde, Bangor University
Rosa Lastra, University of London
Clas Wihlborg, Chapman UniversityFollow

Document Type

Article

Publication Date

6-29-2015

Abstract

In this statement the European Shadow Financial Regulatory Committee (ESFRC) is advocating a conditional relief of Greek's government debt based on Greece meeting certain targets for structural economic reforms in areas such as its labor market and pensions sector. The authors argue that the position of the European institutions that debt relief for Greece cannot be part of an agreement is based on the illusion that Greece will be able to service its sovereign debt and reduce its debt overhang after implementing a set of fiscal and structural reforms. However, the Greek economy would need to grow at an unrealistic level to achieve debt sustainability solely on the basis of reforms.The authors therefore view a substantial debt relief as inevitable and argue that three questions must be resolved urgently, in order to structure debt relief adequately: First, which groups must accept losses associated with debt relief. Second, how much debt relief should be offered. Third, under what conditions should relief be offered.

Comments

This research report was published on an open access basis by ZBW - Leibniz Information Centre for Economics.

Recommended Citation

European Shadow Financial Regulatory Committee (ESFRC) (2015) : Escalating crisis in the eurozone: The case for conditional debt relief for Greece (Statement No. 40), SAFE Policy Letter, ZBW - Leibniz Information Centre for Economics No. 43.