Europe spares private creditors too late

Private creditors are no longer to be involved in debt restructuring measures for struggling euro countries. But this initiative comes too late, writes the liberal business paper Il Sole 24 Ore. "The most surprising proposal is that of excluding private creditors from any future bailouts undertaken by the euro rescue mechanism still in gestation. This is a striking change of course on Merkel's part, for up to now involving the private sector in the rescue of debtor countries had been a mainstay of her crisis management. ... There are indeed many indications that insisting on involving the private sector in debt restructuring would not result in lower risk premiums on the government bonds of the peripheral states despite their tough austerity measures. This also means that we wouldn't be faced with the collapse of the European financial system now if this change in direction had been considered earlier. ... We must now fear that the proposal comes at a point when the damage has already been done."

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