Tuesday, April 7, 2015
Spectre of Grexit back as cash runs out
April 7, 2015
“Grexit” is the phrase once again on everyone’s lips in Europe.
Even if Greece is able to pay back a €450m loan to the International Monetary Fund on Thursday, it will struggle to make the big repayments due over the next few weeks unless it strikes a deal with its eurozone partners, raising the spectre of default and, ultimately, the departure from the single currency that haunted Europe for much of 2012.
“Grexit” is a concise term for a process that may be anything but swift and clear-cut. Lawyers and economists warn that any Greek detachment from the single currency union would probably be a great deal more complex and messier than previously thought.
“There is a lot of loose talk, but there are no mechanisms for forcing Greece to exit the euro — and they don’t seem to want to exit voluntarily,” says Benedict James, a partner at Linklaters, a law firm. “What is more likely is that the government will progressively run out of euros.”