FXStreet (Bali) – Dr Jörg Krämer, Chief Economist of Commerzbank, shares the bank’s view on a possible Grexit, noting that a Grexit would not destabilise the rest of the monetary union.
“A Grexit would not destabilise the rest of the monetary union, though naturally the markets would be shaken if Greece were finally unable to reach agreement with its creditors and appeared to be exiting monetary union. In such a scenario, the markets would initially be dominated by uncertainty. Share prices would plummet, Bund yields would decline noticeably and risk premiums for peripheral and other higher-risk bonds would rise markedly.”
“Unlike in the case of a bad compromise with Greece (Scenario 1), the other euro countries would have demonstrated that they are not prepared to renege on all the rules in a “Grexit” situation. Other euro countries could no longer be sure that they would be bailed out repeatedly when they run into self-inflicted difficulties resulting from dubious economic policies. In the long term this would create rather more incentives for member countries to tackle their own economic problems through reforms – even if it is doubtful that member countries would embark on such course in the short term.”
Dr Jörg Krämer and Dr Ralph Solveen from Commerzbank, share their views on a possible Grexit, noting that a Grexit would not destabilise the rest of the monetary union.
(Market News Provided by FXstreet)