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Who will pay the cost of Europe’s defaults?

23rd May 2011 Socialist Action 0

By Nicky Dempsey

Open disagreements have broken out between the EU Commission and the European Central Bank on the issue of whether Greek government debt should be ‘restructured’  or ‘reprofiled’ in some way.  Debt restructuring would require that the bondholders, mainly European (including British) banks, take some losses on their bonds by having their value written down. ‘Reprofiling’ is a much more modest proposal which may involve little more than extending the life of the bonds, so that interest and capital repayments are drawn out over time.