May 29, 2012
If Greece leaves the Eurozone, many expect that it that will be forced to default. This column argues that need not be the case.
How much would Greece’s creditors lose if the country were to exit the Eurozone?
- It is widely assumed that an exit would be followed by a default because the new currency would depreciate so massively that debt service in euros would be impossible.
- Most of Greece’s debt is foreign debt and must thus ultimately be serviced through higher exports or import compression.