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"Before considering partial haircutting of the foreign debt of the country, we first need to see primary budget surpluses in Greece", said German Chancellor Angela Merkel in connection with German Minister of Finance Volfgank Schäuble’s recent statements. After the Ecofin meeting, he had openly said that a greater private sector involvement in the programme for solving the Greek debt crisis was under consideration. In other words, the foreign debt of the problematic Mediterannean country could be reduced to more sustainable levels and private holders of Greek government bonds will do the "good job".

It seems as if rumours of a serious Greek foreign debt haircutting are starting to be confirmed by official sources but the amount of the reduction has not yet been specified. For the moment, the Greek government is in negotiation with various investment funds, banks and other credit institutions to cancel around 20% of the Greek obligations. This measure is recorded in the arrangements of July 21, 2011 for the overall rescue program for Greece. Currently, it is clear that European economists and politicians consider the percentage of voluntary involvement of private holders in debt restructuring to be rather low and state that it will not contribute enough to bring the debt to more sustainable levels.

Bankers and financiers in Europe, however, are of another opinion, led by the head of the European Central Bank President Jean-Claude Trichet. He is clear that the problems which may arise from the additional private sector involvement in the recovery process of the debt crisis will be much more serious than the current woes in the euro area. Moreover, he disagrees with the increase of stock of the European Financial Stability Facility (EFSF), which currently has reserves of € 440 billion. Many analysts estimate that these funds will not be sufficient if other countries slip in the puddle of the European debt crisis. A possibility that is not excluded for Italy. "I do not support the idea of ​​funding emergency funds,"  Jean-Claude Trichet told the Members of European Parliament.

The European Central Bank knows very well the negative aspects of the financial support having said in late 2009 that it would buy Greek government bonds. It is not ready to make additional services to troubled countries, and believes that a further haircut on the value of Greek government bonds held by banks and investment funds will lead to a domino of bankruptcies.

A hint of what might follow, if Brussels is not perfectly aware of what it wants from the private sector in solving the debt crisis, is the collapse of the share value of the Franco-Belgian bank Dexia. The bank's head office is in Brussels and it holds in its portfolio approximately € 20.9 billion in government bonds of Greece, Italy and several other problematic countries. Apart from the obvious exposure of the state bank to toxic bonds, the financial institution remains seriously dependent on short-term financing, and its liabilities are long-term, which does not inspire any investor confidence. Dexia lost 50% of the value of its shares in just two days, because it holds too many Greek and Italian bonds. It is now threatened by downgrading, although it operates in a country with a much more robust economic performance than Greecе.

The International Monetary Fund also supports the idea of ​​voluntary private investors to cancel most of the Greek debt. The euro zone provided four different ways of easing the country's debt burden, the most preferred of which is currently the exchange of old bonds maturing in the next five years with new ones of 30-year maturity and lower interest rate. The notion that the Greek government bonds will be haircut by about 40% -50% is increasingly circulating amongst the public. If this happens, the Greek banks and social funds, which hold about € 45 billion in Greek government bonds will have around € 27 billion and could be directly threatened in a period of minimum liquidity. Therefore, Commissioner for Economic Affairs of the European Union, Olli Rehn, stressed that countries need to accumulate funds in order to support their financial institutions in the near future. The good results from the last bank stress tests apparently do not matter given that the Franco-Belgian Dexia had enough capital reserves under Basel III, and the core tier1 was 10.4%.

The European Representative to the International Monetary Fund, Antonio Borges, said that Europe would need € 100-200 billion capital injections for banks to enable the financial sector to regain investor confidence and for the recovery program to be implemented in all European countries, not just in those with problems. He called on euro zone countries to accelerate the implementation of the agreements of July 21 in order to deal with the situation in Europe, not excluding the possibility of a new Euro-recession. In a half-yearly report on the European economy, the International Monetary Fund is very critical of the European Central Bank and the lack of effective action to prevent the debt crisis spreading, plus the development of the threat to financial markets. From the Washington office, they believe that the European Central Bank should relax its monetary policy if it wants to deal with the problems of economic growth and inflation.