Why Europe Needs Automatic Haircuts
Having agreed to double the European Financial Stability Facility's capacity to lend to distressed eurozone members, EU countries are now mulling how the EFSF’s funds will be made available. The crucial issue is the extent to which creditors will have to participate in rescue measures by accepting “haircuts” – that is, partial losses on their claims.
https://prosyn.org/UnhalhY
MUNICH – Having already agreed to double the AAA-rated lending capacity of the European Financial Stability Facility, the special fund created by eurozone states to provide assistance to troubled member economies, European Union countries are now discussing the conditions under which the EFSF’s funds will be made available. The crucial issue is the extent to which creditors will have to participate in rescue measures by accepting “haircuts” – that is, partial losses on their claims.