For Greece, the hypothesis of selective default is making headway. Instead, the idea of a new tax on banks seems to have been avoided. These are the central points of the agreement reached by Angela Merkel and Nicolas Sarkozy, who in the night they met in Berlin. The talks, which lasted about seven hours, were attended by the president of the ECB, Jean-Claude Trichet.
Berlin and Paris have finally reached an agreement on two fundamental points: the participation of the private sector in the financing of the Greek debt (a measure which Germany had opposed until yesterday) and the strengthening of the EU state-saving fund, the EFSF, which should be authorized to buy government bonds of countries in crisis also on the secondary market. There is also talk of extending the duration of loans to countries in difficulty (therefore also to Portugal and Ireland) from seven and a half years to 15 years, at an interest rate reduced from 4,5 to 3,5%.
The Franco-German agreement should form the basis for the new measures in favor of the Greek economy which will be established today in Brussels, where a summit is underway between the heads of state and government of the Eurozone. The first objective is to prevent the debt crisis in Athens from infecting other southern European countries, Spain and Italy above all.
According to a source from the Elysée cited by Le Monde, the selective default that Merkel and Sarkozy have in mind for Greece could "last a few hours, a few days or a few months, depending on the securities and the rating agencies". The modalities of implementation of the provision still have to be negotiated, but it seems that the allocation of 30 billion euros is already foreseen as a guarantee.
The ECB has always opposed the hypothesis of a Greek default, even if selective. The fear is that there could be a systemic shock comparable to that of 2008 and fueled by chain downgrades of rating agencies. At this point, however, it seems that even the Frankfurt institution can accept the compromise reached between France and Germany.
It was the Greek default that anticipated the possibility Jean-Claude Juncker, president of the Eurogroup, who said in the morning that he "doesn't rule out" a similar solution, even if "everything should be done to avoid it". The reaction of the Stock Exchanges was immediate, with all the European lists falling into negative territory. However, after a few hours there was a sharp change of course on the markets, bounced on the trail of rumors of the possible rescue-Greece agreement.
