German Chancellor Angela Merkel warned against having too high expectations of Thursday’s Eurozone summit.
While financial markets want a second bail-out deal for Greece to prevent major economies like Spain and Italy from a similar destiny, Merkel warned that no one spectacular deal will resolve the debt crisis.
French President Nicholas Sarkozy is due to meet the German leader in Berlin later today to prepare for Thursday’s summit.
A confidential paper drafted ahead of the 17-nation meeting suggested the introduction of a bank tax. Other options included interest rate reductions on new loans to Greece from the EU rescue fund and repayment schedules of up to 30 years.
The European Central Bank insisted that any solution for Greece must avoid causing a credit event – a full or partial default of its 350 billion euro debt.