Bulletin n. 1/2017
June 2017
INDICE
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
  • Hofmann Christian
    Greek Debt Relief
    in Oxford Journal of Legal Studies , Volume 37, Issue 1 ,  2017
    Politicians, journalists and economists from around the world are calling for a debt restructuring or even large-scale debt relief to resolve the Greek sovereign debt crisis. These voices are thus treating the issue as a matter of political will. This article argues that it is not. Greek debt is predominantly owned by other eurozone member states and Eurosystem central banks. As such, these creditors are not free to decide as they or their voters wish. EU rules set strict limits on political and economic discretion with regard to financial assistance among EU Member States and vis-à-vis EU institutions. This article argues that these restrictive rules delineate clear boundaries for restructuring Greece’s debt, whether this debt is held by EU Member States, eurozone financial facilities or the Eurosystem. These rules even affect restructuring that is supported by a majority vote of creditors under collective action clauses in contracts associated with sovereign bond issuances. These conclusions are based on the recent ruling of the Court of Justice of the European Union in Gauweiler. Although the court has clarified that the Eurosystem is empowered to use a wide range of monetary policy tools in pursuit of the objectives in which it is mandated to engage, this article argues that the ruling also indicates that haircuts cannot be applied to debt instruments issued by EU Member States by the same logic that prohibits monetary state financing.
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