Greek Exit Could Trigger a Run on European Banks
25 May 2012 @ 13:55
Should Greece return to the drachma, its currency probably would suffer an immediate devaluation of as much as 75 percent against the euro, spurring widespread defaults on foreign loans, economists at UBS say. If European leaders couldn’t make a credible argument that Greece was an isolated case, depositors in other nations might decide to withdraw euros from banks or shift them to countries seen as safer. “The more policy makers continue to openly discuss an exit, the more likely that people in Spain, Ireland, and Portugal pull money out of their local banks,” says Andrew Stimpson, an analyst at Keefe, Bruyette & Woods in London. France’s Société Générale estimates that a Greek exit could mean more than $1.1 trillion in loan and currency losses in the U.S. and Europe.
Read full article at Bloomberg Business Week
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