Like banks, all these financial institutions are subject to liquidity or rollover risk the risk of going belly up if their creditors do not rollover their short term credit lines. But, unlike banks, they do not have the safety net implied by central banks role as lender of last resort.

In the meantime, I think it is sensible that we support Ambassador De La Sablière's proposal for a one month rollover.

The Secretariat has advised that audits not conducted in 2004 and considered high risk, would be considered for rollover into the 2005 work plan.

By contrast, growth prospects in Europe today are rather dim, and interest payments, even for Greece or Italy, account for less than 20 of total revenues. The real problem is the rollover of existing debt in a stagnating economy.

Will it be possible for them to rollover their market funding in these circumstances? Already, the Greeks and the other countries subject to special measures have been shut out of the wholesale markets, and are reliant almost entirely on the European Central Bank.

Moreover, the new federal bonds very long maturities meant that there was no rollover risk. It would have been very dangerous to expose the federal government to this danger, given that the operation was rightly perceived at the outset as extremely risky.

1. Expresses its satisfaction with the efforts of all Member States to solve the year 2000 problem before the rollover date of 31 December 1999, including by working to ensure that the private sector was fully engaged in addressing the problem and by tackling it in those systems under their own control

Meanwhile, the current French proposal of a voluntary rollover by banks is flopping, as it would impose prohibitively high interest rates on the Greeks. Likewise, debt buybacks would be a massive waste of official resources, as the residual value of the debt increases as it is bought, benefiting creditors far more than the sovereign debtor.

Given this, China s current deflation should motivate its policymakers to pursue monetary easing, reducing real interest rates to a much lower level, even zero. Such a move for which China has plenty of room would not only enable the reduction of existing debt burdens perhaps more important, it would also allow for the rollover of debt as the economy accelerates.

Even if the face value of the Greek debt were not reduced, a maturity extension would still provide massive debt relief on a present value basis to Greece as a euro of debt owed 30 years from now is worth much less today than the same euro owed a year from now. Moreover, a maturity extension resolves rollover risk for the coming decades.

In an environment of zero or near zero interest rates, creditors have an incentive to extend and pretend that is, roll over their maturing debt, so that they can keep their problems hidden for longer. Because the debt can be refinanced at such low rates, rollover risk is very low, allowing debtors who would be considered insolvent under normal circumstances to carry on much longer than they otherwise could.