The 2012 Greek debt exchange was a watershed event in the euro area debt crisis. It generated fears of contagion and was viewed as a threat to the euro itself. There is a heated debate as to whether the debt restructuring should have taken place sooner. Miranda Xafa’s CIGI paper argues that a deep haircut up front, under threat of legislative action, would have been seen as unnecessary and deeply coercive. But delaying the restructuring beyond mid-2011, when it became clear that Greece’s debt was unsustainable, was unjustified. The delay reduced the stock of privately held debt subject to a haircut, possibly making an official debt restructuring inevitable down the road.
CIGI Senior Fellow Miranda Xafa will give a keynote address on the theme "Lessons from the 2012 Greek Debt Restructuring" at “Export-Led Growth: Prospects for the Greek Economy” held by the Economics Society of DEREE, at the American College of Greece.