A countdown is committed to exit the euro zone crisis that has lasted two years and worried about the world. It should be completed Wednesday with a summit of 26 leaders of EMU, the second in a week. It should be "a complete solution to the crisis. We have had enough of short-term measures that were used plaster to take a few weeks," Saturday criticized the British Minister of Finance, George Osborne. His Belgian counterpart Didier Reynders said the discussions would turn "on a new Greek plan." "In this new plan, there is a substantial effort to Greece again, there is an effort by European countries and will also require an effort of the private sector (ie banks)," he said on the sidelines of the ministerial meeting.
The central bankers of the euro area have already agreed on Friday to request further efforts "substantial" the banks said their leader, the Luxembourg Jean-Claude Juncker. Given the scale of the task, they should meet again Saturday afternoon to continue their work. Their condition: that banks are willing to delete "at least" half of the value of Greek debt they hold, against 21% initially planned for July. "Negotiations with the IIF (the banking lobby) continue, there is no agreement yet," said a source close to the Saturday issue. But "the working hypothesis the most central in discussions with the banks" is that of a haircut (loss by financial jargon) of 50%, she said.
The euro area came to this conclusion based on the findings of an expert report submitted by the troika that brings together donors of funds to Greece. The paper estimates that banks have to accept losses from 50 to 60% for Greece hope to stabilize without excessively increasing the amount of international loans that have already been promised. The challenge is for Europeans to get the green light for banks, or risk creating a "credit event", or the outbreak of insurance against default risk in Greece. Such a scenario would favor those who have speculated about the fate of Greece and especially likely to cause a domino effect throughout the euro area with possible contagion to Italy and Spain.
In return for the effort required on the part of banks, finance ministers from the 27 floor Saturday on a broad plan to recapitalize the banking sector to enable it to cushion the blow. Europe is assessing the needs of 80 to 100 billion euros, two times less than the estimates of the International Monetary Fund, who first sounded the alarm on the need to strengthen the reserves of financial institutions of the Old Continent. Modalities remain to be defined: what is the timetable? Recapitalizations of private or public funds?
For their part, German Chancellor and French President will try in the evening with their respective finance ministers to resolve their differences on how to stem the debt crisis, at a meeting involving both the main European leaders: the EU president, Herman Van Rompuy, the European Commission, José Manuel Barroso, the ECB, Jean-Claude Trichet and Juncker. This will be a lap before the EU summit on Sunday. Blocking is primarily how to strengthen the relief fund troubled countries in the euro area, the EFSF. This instrument is essential to prevent contagion of hope to the debt crisis in countries like Spain and Italy, in the viewfinder of the rating agencies.
Paris has proposed to transform the EFSF bank so that the counter is supplied by the ECB. One option that will not block the Berlin Mint, as it would violate their view the legal prohibition against the central bank to bail out government budgets. France, supported by Spain and Italy in particular, suggested Friday that it could eventually yield. But the subject is not yet evacuated. "We will discuss the European Facility (the EFSF) and its collaboration with the European Central Bank (ECB)," Mr. Reynders said Saturday.