ECONOMY

German ‘wise men’ call for 50 pct Greek haircut

Germany’s panel of economic advisers wants the government to urge a haircut on Greek debt of around 50 percent in view of the worsening euro zone debt crisis, a German daily wrote on Tuesday.

?A haircut on existing bonds of around 50 percent should be sought, reducing the debt ratio to around 106 percent from 160 percent,? the Frankfurter Allgemeine Zeitung (FAZ) cited the group as saying in a pre-publication of its Wednesday issue.

Their statement contrasted starkly with cautious comments made earlier in the day by Chancellor Angela Merkel who doused expectations of any comprehensive solution to Greece’s crisis at an emergency euro zone summit on Thursday.

The group, which advises the German government, want banks to be able to exchange Greek bonds for notes issued by the euro zone safety mechanism (EFSF) to guarantee the stability of the restructuring process.

Merkel’s junior coalition partners however rule out the fund buying back Greek bonds.

?Key stances should be upheld,? the FAZ cited the head of the Free Democrats Philipp Roesler as saying. ?The EFSF rescue fund should not become the creditor for Greek bonds.? [Reuters]