BRUSSELS -- Private investors agreed this morning to accept losses of 50 percent on their Greek bonds, an official said, removing the last apparent roadblock to a broad European plan to solve the continent's debt crisis.
At an emergency summit in Brussels, European leaders had already agreed to force banks to raise 106 billion euros, about $148 billion, by June -- partially to ensure they could weather the expected losses on Greek debt.
The leaders are under immense pressure to finalize their plan after multiple delays and flawed solutions. Market confidence was waning and fears were growing that the 2-year-old crisis could push Europe and much of the developed world back into recession.
But another part of their plan -- finding a way to reduce Greece's crushing debts, which are on track to top 180 percent of economic output -- had been proving difficult.
A European official confirmed that the banks agreed to take losses of 50 percent of their Greek bonds. According to Greece's debt inspectors, that would take the country's debt to just above a goal figure of 120 percent of economic output by 2020.
There were concerns that would require losses that the banks weren't willing to take on voluntarily. Having a voluntary deal is important because imposing losses on banks can trigger massive bond insurance payments that risk creating huge turmoil on global financial markets. -- AP