IslamicFinance.de

Greece’s new Syriza government has two major economic challenges to address: a Resolution of Greece’s unsustainable debt burden followed by a Transition to a long term sustainable economy. Greek finance minister Yanis Varoufakis' proposal is for a conversion of the existing dated ‘debt’ liabilities into a modern form of the undated credit instruments (‘stock’). Firstly, Greece would dedicate an agreed proportion of tax income to long term funding. Greece then issues stock at a discount, each of which is returnable in payment of Greece’s taxes. This new issuance would then be allocated between the different creditors in a way reflecting the repayment date and interest rate of Greek liabilities. From then on Greece would use part of its tax income to buy back this stock for cancellation.