Monday, November 29, 2010


A Franco-German agreement on haircuts that found support in the European Council was made public today. When countries require assistance from the European Financial Stability Facility, a standard agenda item will be whether and to what extent bondholders will be asked to accept a reduction in the value of their holdings.There is nothing automatic in this, but it has both precedent (it is standard in other venues) and the political support of the European Central Bank.

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