March 17, 2015
The ugly word “Grexit” should never have been coined. More than a conventional default, a decision to walk away from a currency is more akin to ripping up the rules of the game. It has only happened at moments of historic failure, such as when Weimar Germany abandoned the old mark. No wonder the architects of the euro left no arrangements for a country to leave.
Since the radical leftwing party Syriza ascended to power, the obstreperous behaviour of its leaders has led to increasing talk of Greece leaving the euro. This is not just a threat designed to bring Athens in line. After governments of every hue failed convincingly to reform the economy, Greek voters in January elected a party that vowed to undo what progress had been made. Rather than endure the weary charade of promises delivered in bad faith in return for debts being extended, many Europeans (including most Germans) would prefer that Greece end the drama and restore the drachma.
They do so in the apparent confidence that this would no longer create an existential crisis for Europe. Financial exposure to Greece is much less than in 2012. Anyone holding Greek debts will have written them down a long way. There are now thick firewalls against the failure of one state cascading into the others. Finally, the ECB is much better equipped to tackle financial stress than at the apex of the euro-crisis three years ago.