'Greece would have to earn haircut'
A row between euro zone governments and the International Monetary Fund over how to make Greece's giant debt mountain manageable is holding up the release of 31 billion euros ($40 billion) in emergency loans needed to keep the country afloat.
IMF officials have argued that some writedown for euro zone governments is necessary to make Greece solvent but Germany, the biggest contributor to the bloc's bailout funds, has repeatedly rejected the idea of taking a loss on holdings of Greek debt, saying it would be illegal.
I regard as an open question whether the need for a haircut in debt arises, Weidmann, who also heads the German Bundesbank, said at an event organised by the newspaper Sueddeutsche Zeitung in Berlin.
A haircut would only make sense as a reward for completing a reform package that puts the country's finances on a sustainable basis, he said.
Once that was achieved, the country could then see its debt load cut and return to markets for funding instead of having to rely on bailout funds.
One can pose the question whether the leap of faith that you give (with a haircut) sets the right incentives or whether it would not make sense to set a haircut, which one will need in the end to regain capital market access, as
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