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A Greek banker, quoted by the Reuters news agency, has reported that the European Commission and the Institute of International Financial are considering extending the repurchase of Greek bonds maturing from 2020 to 2024. The extension of the terms of the Greek bonds swap will greatly facilitate the government of George Papandreou, which hopes to transfer of 90 per cent of the value of the new bailout to its private creditors. According to some local economic editions, € 70 billion are guaranteed from private banks and insurance funds are expected to contribute too.

According to other sources, however, there are two obstacles in the Greek government plans for the emergency activation of the expected roll-over. The first is the observed delay in the launch of the permanent European Financial Stability Facility, which has been agreed at the summit on July 21. As the Finance Minister Evangelos Venizelos was officially informed, it would be very difficult for the countries with high credit rating of AAA, such as Germany and the Netherlands, for example, to convince their parliaments to approve the new bailout for Athens. These countries are anyway very reluctant to participate in the secondary market for government securities. The latest Forsa Institute survey shows that 52 per cent of the members of the ruling German Christian Democratic Union of Chancellor Angela Merkel is against the country's participation in the rescue of the Greek economy and only 42 per cent support it.

One of their most serious argument is that most of the countries participating in the second bailout for Greece borrow money from the capital markets at interest rates one or two per cent higher than those at which Greece obtains the loans. To be able to rely on the second bailout, Athens will have to implement the agreed privatization program and spending cuts in the public sector in full. The heads of the supervisory Troika, who will arrive in Athens on August 16, will assess how it fulfills its obligations. In September, they will present their report to the parliaments of the European Union states, which in turn will have to decide whether to engage in the new bailout for Greece.

The second impediment is the controversy concerning the voluntary participation of banks in the Greek government bonds swap. According to informed sources, the extension of the term of the voluntary swap of maturing bonds with bonds maturing after 10 years or more is necessary to meet the condition of 90 per cent participation of private creditors, some of which are reserved on the matter. There is no doubt that this is a serious obstacle, since Imerisia reported that the Governor of the Bank of Greece George Provopoulos would meet the CEOs and chairmen of the boards of all Greek banks tomorrow morning. The press service of the Greek central bank neither confirmed, nor denied the meeting.

George Provopoulos will discuss with his colleagues the study for the damage the Greek banks would suffer from the Greek government bonds swap, which he assigned to the consulting firm Black Rock in cooperation with the audit house Earnst & Young. They will begin the study in September and complete it by the end of the year. Depending on the results, some or all of the Greek banks will be urged to increase their capitalization to withstand the shocks.