What Happens If Greece Quits The Euro?
Rikard Jozwiak, Rado Free Europe, 15.06.2012
On June 17 Greeks go to the polls in a general election that could determine whether the crisis-hit country remains in the 17-nation eurozone. What happens if Athens quits -- or is forced out of -- the single currency? […]
What would a Greek eurozone exit look like?
No one really knows because no country has left the common currency before. Janis Emmanouilidis, a policy analyst at the European Policy Center, notes that the EU treaties only foresee an exit from the European Union -- but not explicitly the eurozone. "In legal terms, any country exiting the EU or the eurozone would have to exit the EU and re-enter the EU under new conditions," he says.
But Emmanouilidis says he's convinced there must be a so-called "friendly exit" in which everyone involved -- including the EU institutions, the EU member states, and Greece -- agrees on a procedure on how the country should leave. The catch is that this might require a decision in the Greek parliament or a Greek referendum -- something that might prove tricky considering polls indicate that 70-80 percent of Greeks want to remain within the eurozone. […]
What will happen to the rest of the eurozone if Greece leaves?
A Greek exit could further erode confidence in banks, such as in France, that are most "exposed" through lending to Greece and through their Greek subsidiaries.
And then there's the risk of "contagion." Emmanouilidis notes: "People might start saying that 'what happened to Greece was something which a year or two years ago was said would not happen to the country. We were always told that no country would have to leave the eurozone.' So then psychologically people will start asking the question, what does that mean for other member states?" [...]
For the entire article see here.
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