DP9577 | The Greek Debt Restructuring: An Autopsy

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The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief ? over 50 per cent of 2012 GDP ? with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it did so at a cost. The timing and design of the restructuring left money on the table from the perspective of Greece, created a large risk for European taxpayers, and set precedents ? particularly in its very generous treatment of holdout creditors ? that are likely to make future debt restructurings in Europe more difficult.