The Euro-Greek membership is on a knife edge. In the recent escalation of the debt dispute, the Greek government has ruled out a rework their loan application. Thus it is today, Friday, all or nothing. The euro zone finance ministers will discuss the early afternoon at a special meeting on the financial future of Greece.
much is at stake for both sides. If Greece gets no new money, a bankruptcy seems likely this spring. This could easily have meant that Athens has its own currency to keep the financial system going. As early as March is the repayment of a billion amount to the International Monetary Fund (IMF).
Although the possibility remains that the Greek government refuses to pay the Monetary Fund and still remains in the euro. But even that would only be a delay. Because the country’s banks depend on emergency loans from the European Central Bank (ECB) and the ECB may the only maintained if the country is still solvent. A refusal to pay to the IMF, however, would be tantamount to a bank failure.
More than 330 billion euros in the fire
While it is about a great deal for Greece to the euro partners have set in the case of a Grexit losses. Grexit is in the capital markets become naturalized name for a Greek euro exit.
All euro countries have in Hellas on the various rescue vehicle loans, and the ECB Euro system some 330 billion euros in the fire. This represents about 3.4 percent of economic output in the euro zone. Since the year 2012, the liabilities Athens have increased by 40 billion euros, as the British bank Barclays has calculated.
“What the Euro countries since the have fire, can not be ignored entirely, “says Thomas Harjes, a strategist at Barclays. He holds the volume nevertheless manageable, as most Greek debt no longer lie from private sources, but the public sector, ie states and their institutions.
The banks have the risk deported
At the outbreak of the debt crisis, the private banks in Europe had Greek debts worth about 260 billion euros are on their books. Today there are less than 30 billion euros. The main damage caused by the bankruptcy of Greece would thus incurred by the States. A financial crisis as a result of bombed-out banks’ balance sheets would therefore be unlikely now.
However, for the German taxpayers would dearly. In the case of a total loss, the Federal Republic would write off the entire 93 billion euros, which is approximately one third of the federal budget.
Germany Greece has its financial aid last in the years bilaterally on rescue fund, the euro system and the IMF provided. Most of the money, namely 48 billion euros, is in the EFSF bailout fund.
Total loss is unlikely
About bilateral loans has again given 15.2 billion euros for Athens Berlin. About losses at the ECB could also come to Germany more than 23 billion euros. Mathematically, the 93 billion correspond to a loss of around 1,135 euros per German citizens.
Such a total loss is relatively rare in state bankruptcies. On average, the creditor can collect one-third of their claims, but it may experience shows that take years or decades, until the debtor pays
It should be remembered. A portion the losses would not tear at once a hole in the federal budget. The losses of the European Central Bank (ECB), only 20 billion euros of bond purchases and approximately 70 billion by emergency loans to Greek banks would be immediately supported by the euro member states.
No Fear of infection
Although paid-in capital of the ECB amounts only to 7.6 billion euros, giving the Greeks losses could easily wipe out the entire capital buffer, but can a central bank after the most financial experts believe that operate with “negative capital”.
Far greater risks come to the German taxpayer if bankruptcy and Euro- Greece’s exit would lead to a flight of capital from other countries of the Monetary Union itself. The danger is of most observers, low.
“We are of the opinion that a Grexit poses no direct risk of infection to the extent that the other states of would drive the euro zone, “writes a credit analyst Moritz Kraemer of the leading rating agency Standard & amp; Poor’s in an assessment.
Spain, Ireland and Co. investor confidence
While the interest rates have jumped on Greek government debt in recent months according to the uncertainty over Greece’s relationship with its donors since the announcement of the elections in December up bond yields of peripheral countries Italy, Ireland, Portugal and Spain have decreased at record lows. The Kingdom of Spain had, for example, only pay 1.62 percent interest rate on ten-year debt on Thursday. In the case of Greece, the interest rate is just under ten percent.
This was six months before the default of Greece in 2012 was very different, as their yields Southern parallel rather moving.
“This divergence is, in part, that the salvation architecture of the euro-zone is robust today, compared with 2012, the then imminent Greek exit from the euro zone, “said Kraemer. Meanwhile, the policy makers have the European Stability Mechanism ESM introduced , which may contribute financially to the countries of the euro-zone for a hypothetical Greek exit.
The recent success of Ireland and Portugal in their Anpassungsprogrammen European governments have encouraged this support as needed to continue to offer.
investors do not expect other euro-outlets
The Bank for International Settlements (BIS) comes to the conclusion that international banks have only lent some money to Greece and its banks. The National Bank of Greece reported that resident in the euro-zone financial institutions have reduced their commitment in recent months. The commitment corresponded to last only 0.2 percent of total assets.
“The disproportion between the yields on Greek government bonds and those of other countries of the euro-zone points out that even investors expect a low risk that other euro-zone members could draw a currency exchange in Recital
“Standard & amp. Poor’s believes that the financial burden of a Grexit in the remaining Member States of the euro zone would be moderate and would be absorbed over time, therefore we do not assume that a Grexit significant impact on the ratings of these States would, “says Moritz Kraemer.
Malta threaten large losses
However, would a government default and euro exit of Greece some states meet Euro-zone percentage increase than Germany. Malta could suffer as loss in the amount of five percent of its economic output.
Also applies only to the least developed countries, What applies in Germany: that the state budget is balanced According to forecasts by the rating agency Fitch, the debt of Spain and France this year is likely to be without Grexit already more than four percent, the debt ratio is around 100 percent in both countries.. Both countries should not inclined to increase their liabilities by a Greek bankruptcy.
This also explains why some euro states to despite the relative calm the markets are less inclined than Germany, Greece to fend for themselves in doubt.