PSI - A Greek Gordian Knot:
current issues and future consequences
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Date
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Thursday, 2 February 2012
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Time
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18:30 - 20:00
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Venue
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New Theatre, East Building, LSE
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Speakers
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Jeromin Zettelmeyer, Rodrigo Olivares-Caminal, Andreas Koutras & Nick Firoozye
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Chair
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Vassilis Monastiriotis
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As the 'day of reckoning' for the final PSI agreement for Greece was fast approaching, the Hellenic Observatory organised a panel debate on the issue, with the participation of some key experts on sovereign debt and debt restructuring, both globally and in relation to Greece.
The panel consisted of Dr Jeromin Zettelmeyer, Deputy Chief Economist at the European Bank for Reconstruction and Development and former senior advisor at the Research Department of the IMF; Dr Rodrigo Olivares-Caminal, Lecturer at the Centre for Commercial Law Studies at Queen Mary College, an expert on sovereign debt and insolvency law who has acted as policy expert and consultant to various multilateral institutions and international organisations; Dr Andreas Koutras, Director of ITC Markets, a senior market analyst who has written extensively on the Greek PSI and has put forward a proposal involving a so-called "buy-back option" on the Greek PSI; and Dr Nick Firoozye, Managing Director and Head of European Rates Strategy at Nomura. The event, which was chaired by Dr Vassilis Monastiriotis, attracted a varied audience comprising not only LSE students and staff but also a mixture of people from the world of financial markets and from policy.
The debate focused on a number of key issues, including the technical and political difficulties in reaching a PSI agreement; the role of the financial markets and the Eurozone leaders in this; the possible alternatives to and/or possibilities for improvement of the PSI package; and the implications for Greece and the other ailing Eurozone economies of the different post-PSI scenaria.
Dr Zettelmeyer (ppt) opened the debate, speaking on the international experience with sovereign debt crises and later discussing alternative restructuring options for Greece – with emphasis on finding ways to achieve both fiscal sustainability and an orderly restructuring (avoid a credit event and ensure Greece remains inside the Eurozone). Following, Dr Olivares-Caminal (ppt) spoke on the legal dimensions of the PSI negotiations, explaining with remarkable clarity the complexities of the issue and the conditions under which a 'default' is a 'credit event' and vice-versa. The two market analysts followed. Dr Koutras (ppt) analysed the content and logic of the PSI proposal which has been on the table following the Council decision of last October and proposed specific ways in which the existing framework can be complemented by a buy-back option – but, crucially, with so-called Official Sector Involvement, which the ECB refuses to consider – would help improve Greece's debt sustainability without destabilising further the markets. Last but not least, Dr Firoozye (ppt) opened the discussion to the wider issue of fiscal sustainability in the Eurozone, offering a view from the perspective of the international financial investor and sketching out the markets' concern about possible future debt restructurings in Greece, Portugal and beyond, in the absence of a strong and credible political resolution to the current crisis.
The presentations were followed by an interesting debate, both amongst the panellists and with the audience, that reflected among all everybody's anxiety about the positive – whatever this may mean – conclusion of the PSI negotiations and the eventual resolution of the Eurozone crisis.
PRESS: Dr Vassilis Monastiriotis gave an interview to G. Papageorgiou at Athena 9.84 (the Radio Station of the Municipal Authority of Athens) about the PSI in Greece and the prospects of the Greek economy (also with reference to the panel debate) (interview available here starting at 1:13:30').
EVENT PHOTOS
Vassilis Monastiriotis (chair) & all panelists
Jeromin Zettelmeyer Rodrigo Olivares-Caminal
Andreas Koutras Nick Firoozye