What next if Greece leaves the euro?
Q Wouldn’t this be a disaster for Greece?
A The country’s GDP would take a big hit; UBS estimates that up to 50 per cent could be lost. Yet a currency devaluation may help the recovery, and debts could be written off.
Q How would it actually work?
A The Greek government would legally establish a new currency. Authorities may introduce strict currency controls and management of the banking system, to prevent a run on the banks.
Q Surely there would be problems though…
A Undoubtedly. Disputes over deals made in euros would drag on and on. “Legal battles would keep lawyers busy for years,” said Deloitte economist Ian Stewart.
Q And what about the Eurozone?
A It’s unclear how damaging a Greek exit would be. Some economists fear the risk of contagion could be huge to the single currency.
Q Has anything happened before?
A Yes, Argentina defaulted and brought in a new currency. A change also happened when Czechoslovakia broke up.