A senior European Union (EU) official said Tuesday that it was possible Greece might need to restructure its debt. This was the first official acknowledgment that such an action might occur, and it was met with swift resistance from other euro zone officials. The effect on European banks and the European Central Bank (ECB), which all hold substantial amounts of Greek debt, would be huge. American banks also hold Greek bonds.
Reuters reported that Jean-Claude Juncker, chairman of the 17-nation Eurogroup, said at a seminar that coincided with a meeting of EU finance ministers that it would be necessary to move toward something he termed a "soft restructuring" of Greece’s debt.
While he said that Greece must first raise 50 billion euros ($70.7 billion) through privatizing state assets and apply the money to its debt, once that was accomplished some kind of restructuring might be attempted. In the report he was quoted saying, "If Greece makes all these efforts, then we must see if it is possible to make a soft restructuring of Greek debt. I am strictly opposed to a major restructuring of Greek debt."
Other members of the group, however, dissented. After Juncker had commented on the possibility of "reprofiling" Greece’s debt, extending loan maturities without any more extensive action, French Economy Minister Christine Lagarde was quoted as saying late on Monday, "Restructuring, rescheduling—off the table . . . A restructuring or a rescheduling, which would constitute a default situation, what we would call a credit event, are off the table for me."