Discussion on how to deal with highly indebted European countries such as twice bailed-out
Yesterday, ZEW, a body that publishes a closely watched bellwether of business confidence in
"We must get to the situation where the restructuring of state bonds doesn't result in disaster,"
The idea is highly charged because many experts believe that a default by countries in the 18-strong club using the euro damages the currency. Investors hope the group will stick together to support each other through hard times. Establishing a system to allow countries go bust would dash any such hopes.
Although Fuest said the plan should only be introduced in the distant future, say 2025, the idea could yet gather momentum and shape the response if a country such as
If that failed, the ESM would begin negotiations with owners of the |country's bonds, imposing losses and cutting this debt pile to as little as 60 percent of the state's economic output.
It is unclear whether Fuest will win support for his idea in
Fuest conceded that while the so-called viable insolvency procedure for sovereigns would be practical for smaller countries, it would prove |difficult to use for big states such as
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