Decision on Greece expected in hours...or days
Finance Commissioner Olli Rehn: Praying for a solution?
Finance Commissioner Ollie Rehn has expressed himself as being "quite optimistic" that the negotiations for Private Sector Participation (PSI) in the 'haircut' of the Greek sovereign debt will be swiftly concluded.
Rehn made a positive statement on the issue while en route for a Eurogroup meeting on 23 January. Along similar lines, the Athens Stock Exchange was set to close on a high, having gained at least 5%, with the rise being led by banking stocks.
It should be noted that the negotiations for the Greek PSI broke down on 20 January, but were resumed on 23 January, with the Berlin, Paris, Brussels and Athens political classes appearing likely to convince the banks to participate in the haircut, despite the big losses lenders are expected to suffer.
Most of the banks holding Greek bonds are European and are either directly or indirectly controlled by governments. On top of this, the European Central Bank (ECB) has promised to support with ample and almost zero-cost liquidity every Eurozone bank. It seems, however, that now the question is also if the ECB, which holds at least €100 billion in Greek bonds, is going to participate in PSI.
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