Solutions needed

Eurozone countries must settle their debt crisis at an emergency summit this week to stop Greece from toppling into default and possibly dragging the currency bloc's bigger economies with it.

According to German finance minister Wolfgang Schäuble, Greece could slice 20 billion euros ($28 billion) of its massive debt burden by buying back its own bonds, current affairs weekly Der Spiegel reported.

The magazine, due out on Monday, July 18, said this was the scenario that Berlin thought most likely to win consensus in Europe.

According to the report, the European Financial Stability Facility (EFSF) could lend the money to Greece so it could buy back bonds from private creditors at market prices.

Thanks to its AAA status with the ratings agency, the EFSF could easily raise the money required in the markets, and then lend it to Greece at favorable rates the debt-ridden country can no longer find on the open market.

Another German proposal would involve the exchange of existing Greek bonds for ones that mature over a longer period.

Extraordinary summit

Greek Prime Minister George Papandreou issued a call for Europe to "wake up" and find a solution to his country's debt crisis.

In comments made in an interview with the Greek Kathimerini daily for Sunday, Papandreou insisted that Greece would not default on its debt. He said that there was "no room for voices that cultivate fear and bank on failure."

He added that talks were ongoing to find a "long-term" resolution to the crisis.

Eurozone nations are to hold an extraordinary summit on July 21 in Brussels to discuss how to tackle the debt crisis and provide fresh aid for Greece.

EU member states want to move quickly to stop the crisis spreading from Greece, Ireland and Portugal to other countries perceived as vulnerable, such as Italy and Spain.

Dangers of restructuring

Meanwhile, German central bank chief Jens Weidmann warned against the issuing of eurobonds and restructuring Greek debt.

Weidmann told the German weekly "Bild am Sonntag" that "nothing would destroy the motivation for solid budgetary policies faster than joint liability for state debts."

The banker said such a step would mean that European and above all German taxpayers would have to vouch for the entire Greek debt.

According to Weidmann, the problem would remain for as long as Greece continued to consume more than it produces.

Last year, the EU and International Monetary Fund bailed out Athens with a package worth 110 billion euros. The country however remains in serious financial difficulty, and credit rating agencies have demoted its debt to junk status.

Author: Timothy Jones (AFP, dpa)
Editor: Toma Tasovac