However, anecdotal evidence suggests that even in the best-case scenarios, borrowers given repayment plans re-default at a high rate, especially when the arrears are large. Loan modifications, which involve any permanent change to the terms of the mortgage contract, may be preferred when the borrower cannot cope with the higher payments associated with a repayment plan.
In fact, the government has to go much further than just eliminating its debt to the central bank. Much of the attractiveness to the private sector of holding government debt rest on the ease at which it can be sold to the Central Bank.