European officials are insisting that any new Greek bail-out programme specifically earmarks funds to pay off remaining holders of Greek debt, giving lenders the freedom to withhold aid to Athens without risking a messy default that could reignite panic in financial markets.
Under a new Franco-German plan that senior European officials said is likely to be included in a new Greek rescue, eurozone officials would create an escrow account to accept new bail-out funding instead of paying it all directly to Athens.
The new fund would then ensure that bondholders are paid off, while additional cash to run the Greek government could be withheld if Athens did not live up to tough new reform demands.