DP9577 The Greek Debt Restructuring: An Autopsy

Author(s): Mitu Gulati, Christoph Trebesch, Jeromin Zettelmeyer
Publication Date: July 2013
Keyword(s): debt restructuring, Eurozone crisis, financial crises, Greece, sovereign debt, sovereign default
JEL(s): F340
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9577

The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief ? over 50 per cent of 2012 GDP ? with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it did so at a cost. The timing and design of the restructuring left money on the table from the perspective of Greece, created a large risk for European taxpayers, and set precedents ? particularly in its very generous treatment of holdout creditors ? that are likely to make future debt restructurings in Europe more difficult.