The problems with a Greek “light dusting”

So here’s the idea of how Greece could restructure its debt as early as this year, if it were so inclined, while being able to formally say that it was not really doing so, and while avoiding a trigger of its CDS. It would offer an entirely voluntary bond swap, under which existing debt would be replaced by new bonds with longer maturities, lower coupons, and possibly even a lower face value. The ECB, as one of the architects of the deal, would certainly tender all of its debt into the deal — as would the governments of France and Greece.
And European banks would be tempted to accept as well, for a few different reasons: the new bonds could be repo’d at the ECB, or they might be backed by some partial European guarantee, or some combination of the two. And of course there would be a huge amount of arm-twisting behind the scenes, with central banks applying “moral suasion” to the commercial banks they regulate, urging them to tender their bonds into the deal.

ολόκληρο