"An exit of Greece from the euro is not without risk"

cep economics expert Kullas: Nobody can predict how capital markets would react to a 'Grexit'

Even though the contagion risks are not as big as some years ago, “an exit of Greece from the euro is not without risk,” cep economic expert Matthias Kullas told Germany’s Focus Online. Nobody is in a position to predict with any certainty how capital markets would react, he remarked. “It’s possible that capital markets will price in a foreign exchange rate risk when handing out loans to euro states, because they’ll act on the assumption that other euro states might also reintroduce a national currency,” Kullas explained. Moreover, Greece would most likely default on part of the loans handed to the country by its eurozone peers under several financial aid programs. This would put a burden on the state coffers of the countries which granted the loans to Greece. “Finally, the ECB would have to forego on claims against Greece which result from Target liabilities and the purchase of Greek government bonds,” Kullas said.