Germany's Finance Ministry is considering a debt buy-back as a possible way of reducing Greece's huge debt pile which threatens to rise well above a target level of 120 percent of GDP by 2020, according to German news magazine Spiegel.

The Greek government could borrow money from the eurozone's permanent bailout fund and use this to buy back its own debt, which at present trades at around 25 percent of its face value. Buying just 10 million euros worth of Greek bonds could reduce the debt mountain by 40 million, Spiegel said.

Talks would have to take place with debt-holders to see if they would accept such a price for their Greek paper.

A spokesman for the Finance Ministry declined to comment directly on the report on Sunday, saying Germany was waiting for a report into Greece's progress in meeting bail-out conditions by the country's «troika» of international lenders.

"We don't want to engage in speculation,» he added.

Last week European Central Bank Executive Board member Joerg Asmussen made the same suggestion about the Greek government buying back its own debt. [Reuters]