EU Finance Ministers Debate Financial Crisis

Posted October 22nd, 2011 at 10:35 am (UTC-5)
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European Union finance ministers are meeting in Brussels to hammer out details on how to stabilize banks faced with massive losses related to Greece's debt and how to boost the eurozone's bailout fund.

The meeting comes ahead of the EU summit Sunday in the Belgian capital.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have been unable to reach an accord on a common plan.

France wants to turn the continent's bailout fund into a bank that would have access to vast sums of credit from the European Central Bank. But Germany is advocating that private European banks assume bigger losses on their Greek debt. France and the continent's central bank argue that would just weaken the banks and lead to further turmoil on the world's financial markets.

One of Europe's leading bankers, Commerzbank chief Martin Blessing in Germany, has said Greece should declare itself bankrupt and restructure its debt. He said European banks will not voluntarily accept bigger losses on their Greek debt unless the country acknowledges it is insolvent.

On Friday, international lenders said private banks lending money to Greece may have to forgive more than half of what the debt ridden country owes.

The latest review by European Union and International Monetary Fund experts showed that a Greek bond writedown of 50 to 60 percent could still leave the country's debt burden bigger than its yearly economic output by 2020.

European Union finance ministers Friday approved another $11 billion segment of Greece's 2010 international bailout to keep it from going bankrupt. That leaves only the International Monetary Fund to sign off on the payment, which is a part of the $159 billion bailout.