Banks Were Persuaded by Leaders’ Threat on Default, Juncker Says

European leaders were prepared for a “total insolvency” of Greece if bondholders resisted the 50 percent writedown put on the table, Luxembourg Prime Minister Jean-Claude Juncker told reporters today after a summit that delivered a revamped debt-crisis strategy.

“It was the fiercely rendered wish by the people, Merkel, Sarkozy, Juncker, that if a voluntary agreement with the banks was not possible, we wouldn’t resist one second to move toward a scenario of total insolvency of Greece, which would have cost states a lot of money and which would have ruined the banks,” he said.

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