What's going on in Greece?

 

The new Greek government, led by the Coalition of the Radical Left (Syriza), won power

on 25 January. Much of the discussion surrounding the Greek crisis revolves around the

probability and implications of a sovereign default and on whether the introduction of a

national currency would help pull the Greek economy out of recession. Less attention has

been paid to the banking sector, which often plays a decisive role in the development of

debt and currency crises.

 

To understand the Greek situation, we invite you to read the two blogspots published

by Warning Signals on this issue:

 

• On Frebruary 24, we published a special blogspot on the agreement reached by Greek government and the Eurogroup. Read more here.

• On February 9, the debate was focusing on the choice of Siriza to get rid of austerity and the costs and benefits associated with such decision. Read more here.

 

Below you will find a list of major articles on the link between financial risks and the Greek situation with a short summary.

 

On a possible failure of banking system in Greece and its impact on the Eurozone:

• Peter Allen, Barry Eichengreen, Gary Evans on 28th February 2014 calls for a debt reduction. This column argues that instead of offering another lengthening of maturities and reduction in interest rates, Eurozone leaders should seize the occasion and implement debt-for-equity swaps that would encourage foreign investment, speed privatisation and jumpstart the Greek economy.

• Guntram B. Wolff on 17th February 2015 exhibits the limit of a monetary union based on the Greek case.

• Thorsten Beck on 2nd February 2015 explains why creditors should accept some losses in order to escape a much bigger crisis.

• Guntram B. Wolff on 2nd February 2015 on how to save the weak Greek banking system.

• Silvia Merler on 29th January 2015 displays which countries are the most expost to Greece.

• Eduardo Levy Yeyati, Maria Soledad Martinez Peria, Sergio Schmukler on 29th June 2011 imagine different scenario for Greece if the country chosed to quit euro and the impact on banking sector.

 

On Greece repayment calendar:

• Silvia Merler on 10th March 2015 on important deadlines for Greece repayment schedule.

 

On the cost of a Grexit:

• Zsolt Darvas and Pia Hüttl on 16th January 2015 conclude that German losses on both official and private claims would be much higher if Greece exits the euro

• Guntram B. Wolff on 6th January 2015 buries the impression that Greece export would largely benefit from a Euro exit.