A Greek Exit from the Euro Area: A Disaster for Greece, a Crisis for the World  Citi

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Global Economics View
A Greek Exit from the Euro Area: A Disaster for Greece, a Crisis
for the World
 A Greek exit from the Euro Area has become more likely recently.
 Greek EA exit would be hugely costly for Greece and yield only small benefits.
 Greek EA exit would also have large negative effects on the rest of the EA through
direct and indirect channels.
 The most important indirect effects would be due to the fact that a taboo was broken
that countries do not leave the EA, further increasing pressures on the remaining weak
EA countries.
 Greek EA exit would most likely be preceded by a halt in Troika (IMF, EU/EA, ECB)
funding for the Greek sovereign and banks and would be closely preceded or followed
by Greek sovereign default.
 Greek sovereign default is consistent with Greece remaining in the EA.
 Deep restructuring involving large NPV losses for both private and official creditors
other than possibly the IMF is a given in the case of Greece – a Greek exit from the
euro area (EA) is not. For the sake of economic stability and growth in the EA, the
wider EU and globally, we hope that this message is taken to heart by the European
authorities.