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Greece should declare bankruptcy as soon as possible, recommends Commerzbank. The financial experts of the German bank insist that the voluntary reduction of the value of the Greek government bonds held by private individuals and funds (Private Sector Involvement - PSI) will not be enough to make the Greek debt sustainable. The head of Commerzbank, Martin Blessing, stresses that the haircut on bank assets that are part of the Greek foreign debt will not solve the problem.

The head of the second largest bank in Germany says that this programme cannot be implemented voluntarily. Bankers argue that countries with very large foreign debt have two options to get out of this awkward situation – either repay the debts themselves by tightening the belt, or declare partial bankruptcy by determining the haircut level. Lenders’ voluntary participation in the rescue of the Greek foreign debt will shake other countries’ confidence in the government bonds, the financial institution emphasizes. The banker insists that the member states can chose between two options, to either pay their debts as provided or go bankrupt. Blessing does not deny that a possible bankruptcy would seriously affect the European banking sector. According to him, banks in the area should explore every opportunity to recapitalize themselves before relying on state support funds.

Meanwhile, rumours of a 50% reduction of the Greek foreign debt are becoming more insistent. Sources from the heart of Europe, who are still keeping their anonymity, are reporting that negotiations are being held in the banking sector and its representatives are willing to accept a larger haircut. If the final reduction of the debt reaches 50% of the total, it means that Greece would be exempted from € 67.5 billion. After the recapitalization of banks and other costs, the final amount of the entire operation will constitute approximately 20% of the total debt, which puts the whole action under question.

Greek entrepreneurs are seriously concerned about the possibility of an additional debt haircut. "A 50% haircut or larger, as certain circles suggested would have very little effect on the net entry of the Greek debt of the agreement of 21 July this year, but it will bring dramatic consequences for the national economy and personal property of Greek citizens," reads the analysis of the Hellenic Federation of Enterprises.

"The situation is very serious. We have a great responsibility; everybody knows it. We are responsible to Europe, to the euro area and the global economy," the German Minister of Finance, Wolfgang Schäuble, told journalists in Brussels. He urged European leaders to find a stable solution to the debt crisis in Europe, which is growing at an unexpectedly rapid pace. The problem that started as a crisis of the foreign debt of the small country Greece, which adds only 2% to euro area GDP, has unmasked the lack of political will of the old continent and made international investors particularly anxious for the development of the European issue. Schäuble is clear that France and Germany should have decided how they would solve the difficult task before the next meeting of the G20, which will be held in Cannes on November 2-3 this year.

For now, all are expecting the summit of European leaders, which will be divided into two parts. The first meeting will take place this Sunday, and the second - in the middle of next week. Then, the functions and the final version of the European Financial Stability Facility (EFSF) need to be clear. France insists that it should become a guarantee fund or a new kind of European bank to provide liquidity when needed, while Germany insists that it should remain a support mechanism for troubled countries. France is at serious risk if the Greek foreign debt is reduced further, because its banks have "swallowed" a significant amount of Greek government bonds. Germany, on its part, is not experiencing similar problems and its political governance is calling for a further haircut on Greece’s obligations.