German Chancellor Angela Merkel has outlined her plan to save the euro, and it’s pretty much the same plan eurozone leaders are currently working with.
There are some additions that will hit bondholders, however:
7. Private lenders will, on a case by case basis, participate in the crisis management. In the case of a government default, lenders will have to take losses.
8. As from 2013, newly issued government bonds will contain collective action clauses (CAC) for making lenders participate in the case of government insolvency.
No eurobond. No fiscal union. And not really any sovereign debt restructuring (yet). Just what we had before (bailouts conducted by the IMF-EU with the need for unanimous support).
The deal is likely to be worked out today that would see this the latest addition to the EU’s growing Lisbon Treaty.
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