Eurozone financial crisis: Winners and losers

But according to Simon Tilford, chief economist of the London-based think tank the CER, the chances of hedge funds being hit in that way are slim. Mr Tilford says European politicians and policymakers fear the consequences of compulsory write-downs. Because they believe investors would then assume that compulsory write-downs could be applied to other countries' bonds. "They are worried that if they compel borrowers to take haircuts, there will be a dramatic sell-off of Italian and Spanish debt ... That would ramp up borrowing costs for those countries and compound the difficulties they're in." If Spain and Italy were to get into a vicious cycle like Greece, Mr Tilford warns, "the future of the euro would be very much in doubt".