Banks caution Europe against new debt swap

(WASHINGTON) - The head of the Institute of International Finance, Charles Dallara, warned Friday against any more eurozone sovereign debt restructuring in the wake of Greece's huge writeoff deal.

"I would strongly discourage other governments, other peoples of Europe from going this route," Dallara, the IIF managing director who led the private-sector negotiations with the Greek government, told CNBC television.

On Thursday the world's biggest debt restructuring in history was completed, accepted by an overwhelming majority of Greece's private creditors.

But it has led to questions as to whether Portugal or Ireland, currently undergoing EU-International Monetary Fund bailouts like Greece, would follow suit to lower their debt service costs.

Asked why he would discourage the two countries from trying to write down their debt, Dallara pointed to the difficult and painful process in entails.

"Because it has been extraordinarily painful for the citizens of Greece, for the leaders of Greece, and for the entire eurozone: it just cast a cloud over the eurozone that has hung there for months and months," he said.

"And it has prevented the rebuilding of confidence, which is crucial."

Dallara stressed the singularity of the Greek sovereign debt crisis.

"Uniqueness really characterizes the debt and the distortions of the Greek economy," he said.

The IIF is a Washington-based group representing major private banks and financial institutions around the world.