News / Europe

Greek Bank Says Euro Exit Would Have Dramatic Effect

A man makes his way past a replica of a one drachma coin outside the Athens Town Hall, May 21, 2012.A man makes his way past a replica of a one drachma coin outside the Athens Town Hall, May 21, 2012.
x
A man makes his way past a replica of a one drachma coin outside the Athens Town Hall, May 21, 2012.
A man makes his way past a replica of a one drachma coin outside the Athens Town Hall, May 21, 2012.
VOA News
Greece's biggest bank says that if the country exits the euro currency bloc the effect on the nation's populace would be dramatic.

As the country heads to a new round of parliamentary elections in mid-June, the National Bank of Greece said Tuesday that a eurozone exit "would lead to a significant drop in living standards for Greek citizens."

The country's top lender said that Greeks would lose more than half their income and the value of the reinstated drachma currency would fall 65 percent. In addition, it predicted that the Greek jobless rate would jump from 21 to 34 percent while inflation skyrockets from 2 to 30 percent.

A coalition government of Greek socialists and conservatives agreed earlier this year to impose a sweeping austerity plan in exchange for billions of dollars in new rescue funds from its European neighbors and the International Monetary Fund. But the country's fractious political parties were unable to forge a new government after a splintered election earlier this month, leading to the new vote next month.

European leaders repeatedly have said they want Greece to remain in the 17-nation currency union. They also have said the Athens government must adhere to the austerity plan or it won't be handed any more rescue funds. Recent political surveys show the conservatives leading, with an anti-bailout party, the radical left Syriza party, trailing close behind.

One international finance expert, Andreas Hauskrecht of the Indiana University business school, said he sees Greece exiting the eurozone no matter how the election turns out.

"The likelihood is close to 100 percent, and it will happen in 2012 most likely. I wouldn't be surprised if it happens over the summer," said Hauskrecht.

He said that even if a new coalition government is formed that supports widespread wage and pension cuts and elimination of thousands of government jobs, it won't be enough to prevent a euro exit.

"The reasons are simple. Let's take the most optimistic way. They are able to form a government after the election June 17th. They are able to hold to their promises on the fiscal side and they still will default because the Greek economy is shrinking so quickly that the numbers that were the basis for the original plan to cut fiscal deficits are insufficient. So basically, they are in a vicious circle and it's only a question of time until they will have to default. The less optimistic say they cannot build a stable government, which is much more likely, and then they will default already in July 2012," said Hauskrecht.

Hauskrecht said that despite public pledges of support for Greece from other eurozone nations, Germany and more economically stable countries have grown weary of handing the Athens government more assistance.

You May Like

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs