BERLIN (AP) — German Chancellor Angela Merkel is warning that a full-scale restructuring of Greek debt would have "completely uncontrollable"consequences on the financial markets.
Merkel said Wednesday that imposing a so-called haircut on Greek debt — reducing the amount to be repaid — would not only endanger banks and other creditors who hold Greek bonds, but also institutions that sold insurance policies against a default.
Merkel told a parliamentary committee that those credit default swaps have a higher face value than the debt itself.
She says "nobody around the globe knows exactly who holds those papers, who will have to pay how much."
The chancellor wants to get private creditors to contribute to the next aid package for Greece on a purely voluntary basis.