Talks between Greece and international creditors over a second bailout stretched past yet another deadline, but appeared to be moving toward a conclusion Wednesday after the European Central Bank reportedly agreed to exchange Greek government bonds at less than face value in an effort to further reduce the nation’s debt load.
The ECB will exchange government bonds bought in the secondary market last year at a price below face value once debt-restructuring talks with private creditors are successfully concluded, The Wall Street Journal reported, citing unnamed people briefed on the talks.
Under the plan, the ECB would exchange its Greek bonds for bonds issued by the European Financial Stability Facility, the euro zone’s temporary rescue fund. The EFSF would then return the bonds to Greece, which would repay the EFSF at the price which the fund purchased the bonds from the ECB, the report said.
The ECB had previously resisted suggestions it should take a hit on its Greek bond holdings, insisting it had made the purchases in an effort to overcome dysfunctional markets that were blocking the transmission of its monetary-policy maneuvers.
