Greek Meltdown Would Cost One Trillion Euros--Institute of International Finance

The Institute of International Finance which negotiated the private debt swap for many holders of Greek sovereign debt claims that a “disorderly” default of the southern EU nation would have cause a falling of a number of dominos. Like most forecasts of what might happen in Europe. It is nothing more than a guess

The Institute of International Finance supposes that if the financial aid package to Greece did not come together, capital markets investors would assault the debt of Spain and Italy, driving them toward default as well.

According to Reuters:

“There are some very important and damaging ramifications that would result from a disorderly default on Greek government debt  ,” the IIF said in a document.

“It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros.”

The analysis further supposes that

If the Greek deal fell apart, the European Central Bank  would likely suffer substantial losses, the document said, estimating the central bank’s exposure to Greece of 177 billion euros was over 200 percent of its capital base.

Add all of this to other opinions that a Greek default would not matter, and that the nation would simply be asked to leave the euro