On the Potential Threats from a Greek Eurozone Exit

Publication: Policy Letter No. 11, 2012
Topic Area: Macro and Finance
Authors: Ester Faia
Date: May 2012
Keywords: European Monetary Union, TARGET balances, inflation

In the event of a Greek exit from the Eurozone, the stronger members of the monetary union, especially Germany, face at least two risks: First, the debt of the Greek National Bank vis-à-vis the Eurosystem of central banks will most likely be lost. Secondly, the large flow of capital from Greece and other periphery countries to Germany will accelerate inflation.

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