IIF: Danger of 1 trln euro fallout from Greek default
A disorderly default in Greece would likely necessitate outside support for Spain and Italy to stop the threat of contagion, and could cause more than 1 trillion euros of damage to the eurozone, a group of bondholders warned.
"There are some very important and damaging ramifications that would result from a disorderly default on Greek government debt,» a document from the Institute of International Finance said. «It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros."
The document was obtained by Reuters from a market source. It was dated Feb. 18 and marked «IIF Staff Note: Confidential».
The IIF wants bondholders to sign up for a bond swap deal by a deadline on Thursday, aimed at saving Greece more than 100 billion euros and putting the country on a more stable footing.