Greece to issue government IOU's to pay wages and pensions?

IMF chief Ms Lagarde demanded debt restructuring for Greece, as this was the only way of ensuring that the country's debt would become sustainable once again. The German government on the other hand has made it very clear that a haircut is in breach of the European treaties. 

In case of a haircut investors are forced to relinquish some of their demands. In case of a debt restructuring the conditions of the repayments are changed. That means the debt is not directly cancelled. The distinction is nonetheless not economically convincing, as the cash value of the demands changes. It is sufficient to imagine that the interest rates were changed towards zero and the maturity increased towards eternity. 

The cash value of the demands would then be zero, the debt almost entirely written off. The actual conflict between Athens and the donor countries therefore revolves mainly around the question as to whether debt restructuring should be the start of the negotiations or be left until the end. And this is where the donor countries and the IMF are in total agreement, initially Athens will have to promise reforms. 

Greece is already debating to issue government IOUs to pay wages and pensions. This is often seen to equate with the introduction of a parallel currency. The introduction of such a system simply means that Athens is no longer servicing its debts with its own population, says Commerzbank.