Milton Ezrati
June 27, 2015
Greece could be on the brink of defaulting. What comes next?
As many media discussions have implied, the debt part of the financial equation is not especially threatening. Greece for one, is a small economy. Its gross domestic product (GDP) is barely 6.5 percent of Germany’s. For another, its outstanding debt amounts to barely 1 percent of Europe’s banking assets. Even if that debt were widely held, default would hardly threaten the continent’s financial stability. And since the debt is now largely held by governments and other official bodies, the financial system has an additional buffer against uncertainty. Meanwhile, the ECB’s bond-buying program should stem any fears that Greek default will force unsustainable borrowing costs on Italy, Spain and others in Europe’s troubled periphery.





