Greece should declare itself insolvent and carry out a real restructuring of its debts in order to win back the confidence of markets, Martin Blessing, chief executive of Commerzbank, said in an interview published Friday.
“Greece needs a haircut,” or for its creditors to accept losses on Greek sovereign debt, Blessing told German newspaper Bild.
“Without a real restructuring of Greece’s sovereign debt and reconstruction program, Greece won’t be helped and markets won’t be calmed,” Blessing said.
Rather than seeking voluntary participation from private creditors in its next bailout, Greece should declare its insolvency, Blessing said. That’s possible if the troika of international inspectors–the European Union, the International Monetary Fund and the European Central Bank–doesn’t pay out the next tranche of aid, he added.
“It must be clear that states have only two options: either pay their debts as agreed or declare themselves insolvent with all the hard consequences,” Blessing said.
Banks would probably need to raise capital if Greece goes bankrupt, but they should be allowed to do so themselves at first, Blessing added.
(source: Dow Jones)
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