“Within those parameters then there is a lot of working and thinking and exploring at the moment but nothing that could be done involuntarily,” Lagarde said in a brief interview today in Beijing, where she is seeking to bolster her candidacy for the post of International Monetary Fund managing director. “So in any event it will have to be voluntary and well announced.”
Lagarde’s remarks come after German counterpart Wolfgang Schaeuble earlier this week said that bondholders must contribute a “substantial” share of a second aid package to Greece.
Schaeuble told European Central Bank President Jean-Claude Trichet and fellow euro finance ministers in a June 6 letter that any agreement on aid at a ministers’ meeting on June 20 “has to include a clear mandate -- given to Greece possibly together with the IMF -- to initiate the process of involving holders of Greek bonds.”
Schaeuble also said in the letter that maturities on Greek bonds should be extended seven years to give the nation time to overhaul its economy.
The German position clashes with the stance of European Commission officials and the ECB, which oppose anything beyond a voluntary rollover of debt as they struggle to avert the euro area’s first sovereign default. A swap offering investors terms that are “worse” than those of existing securities would constitute a coercive or distressed exchange, and be considered a default, Fitch Ratings said this week.
Lagarde, 55, told reporters in Beijing today that finding a solution to Europe’s sovereign debt problems is “the immediate focus of the fund’s operations at the moment.” She urged Greece to follow the example of Portugal and form an “alliance” between rival political parties.
Portugal’s actions were “critical to building and restoring confidence, and it shows in the numbers,” she said.
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