Finance

Finance

Creditor group sees 1 trillion euro Greek default risk

07 March 2012 08:05 (UTC +04:00)

Baku - APA-Economics. A disorderly Greek default would cause more than a trillion euros ($1.3 trillion) of damage to the euro zone and could leave Italy and Spain dependent on outside help to stop contagion spreading, the main bondholdersâ€™ group has said.

Greek private creditors have until Thursday night to say whether they will participate in a bond swap that is part of a bailout and restructuring deal to help it manage its finances and meet a debt repayment on March 20.

Spain and Italy might require 350 billion euros in outside support to contain the fallout, the IIF said, while the cost of helping Ireland and Portugal could total 380 billion euros over five years. If the deal fell apart, the European Central Bank would suffer substantial losses because its estimated 177 billion euro exposure to Greece is over 200 percent of its capital base, the IIF said. The bank lobby group, which helped negotiate the swap on behalf of creditors, also said bank recapitalization costs could easily hit 160 billion euros if no swap is agreed.