Last week’s news of proposals for a voluntary “rollover” of Greek debt brought some hope that the policy impasse over the crisis may soon be over. Crucially, there were signs that the ECB − until now steadfastly opposed to any form of restructuring − would sanction the move. But the plans still face big hurdles. In particular, it is unclear just what sort of incentives investors could be offered to persuade them to take on long-term Greek debt at an interest rate anywhere close to acceptable for Greece itself. After all, Greek 10-year bonds are currently yielding 16%, but any borrowing costs over 6% or 7% are generally considered unsustainably high.
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