Most of the main financial-media outlets are commenting today on an internal document from the Institute for International Finance (IIF) which warns of the potentially large risks that could arise from a debt default by Greece.
The document, which was obtained by Reuters from a market source, was dated February 18th and marked “IIF Staff Note: Confidential.”
According to that document, “there are some very important and damaging ramifications that would result from a disorderly default on Greek government debt (…) 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 €1trn.”
More specifically, it states that even the European Central Bank’s capital base could be impaired and, apparently (it is not at all clear), that most of the countries of the European periphery could require further help, to the tune of another €730bn.
Of that amount €350bn would be for Spain and Italy in the case of a ‘disorderly’ default.
Additional bank recapitalization costs could rise by a further €160bn.
(source: sharecast)
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