Suggestions that Greece can default but remain inside the euro-zone overlook the fact that Greece needs both a very large debt write-down and a more competitive currency. Recent comments from euro-zone officials appear to acknowledge that the only development which can significantly improve Greece's debt position is a default.
Officials have also suggested that a Greek default would not necessarily imply an exit from the currency union. And euro-zone finance ministers pledged to consider allowing further such measures once Greece achieved a primary budget surplus, a condition since met.
"We don't think a default on its own can provide a full solution for Greece. It will either need another bailout as well or, if it chooses the nuclear option of a big write-down, will almost certainly leave the euro too. The chances of the latter are rising by the day." - says Capital Economics
Commentary
Greek default would not necessarily imply an exit from the currency union
Suggestions that Greece can default but remain inside the euro-zone overlook the fact that Greece needs both a very large debt write-down and a more competitive currency. Recent comments from euro-zone officials appear t…
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