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On 9 March 2012 the International Swaps and Derivatives Association (ISDA) issued a communiqué calling the debt restructuring deal with its private sector involvement (PSI) a "Restructuring Credit Event" which will trigger payment of credit default swaps. According to Forbes magazine Greece's restructuring represents a default.
A robust market in credit default swaps can also serve as a barometer to regulators and investors about the credit health of a company or country. [34] [42] Germany's market regulator BaFin found that naked CDS did not worsen the Greek credit crisis. [40] Without credit default swaps, Greece's borrowing costs would be higher. [40]
Credit default swaps are back in the news because of Greece. After one bailout to avoid a debt default, the country is on the verge of a second, with $70 billion in credit default swaps at stake.
Greece faced a sovereign debt crisis in the aftermath of the 2007–2008 financial crisis.Widely known in the country as The Crisis (Greek: Η Κρίση, romanized: I Krísi), it reached the populace as a series of sudden reforms and austerity measures that led to impoverishment and loss of income and property, as well as a humanitarian crisis.
On Friday, Greece reached a deal to "restructure" its national debt. As part of the deal, creditors to the nation will see the face value of their debt cut from about $266 billion to $133 billion.
Credit default swaps are a portfolio management tool that gained notoriety during the peak of the 2008 financial crisis. These derivative investments are bit more complex than stocks, mutual funds ...
Starting in 2018, banks in both Greece and Switzerland will exchange information about the bank accounts of citizens of the other country to minimize the possibility of hiding untaxed income. [23] In 2016 and 2017, the government was encouraging the use of credit card or debit cards to pay for goods and services in order to reduce cash only ...
Then, in March 2012, the Greek government did finally default on parts of its debt - as there was a new law passed by the government so that private holders of Greek government bonds (banks, insurers and investment funds) would "voluntarily" accept a bond swap with a 53.5% nominal write-off, partly in short-term EFSF notes, partly in new Greek ...