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

South Korea Divided on Response to North’s Cyber Attack

In past five years, officials in Seoul have accused Pyongyang of hacking into banks, government websites, causing chaos and inflicting millions of dollars in damages More

Video Calm Amid Fear in Daily Life in S. Sudan’s Bentiu

Residents have been trying to regain some sense of normalcy, but planning for the future remains uncertain as fear of attacks looms More

2015 Could Be Watershed for Syria Conflict

Republican control of US Senate in January could lead to more aggressive policy against IS militants in Syria - and against regime of Bashar al-Assad More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Jane Monheit Christmas Speciali
X
December 22, 2014 8:15 PM
Chanteuse Jane Monheit sings the holiday classic “Have Yourself a Merry Little Christmas,” and explains why it’s her favorite song of the season.
Video

Video Jane Monheit Christmas Special

Chanteuse Jane Monheit sings the holiday classic “Have Yourself a Merry Little Christmas,” and explains why it’s her favorite song of the season.
Video

Video Trade Talks Could Heat Up in 2015

With boosting trade a top priority for the Obama administration, 2015 may be the year that an agreement is finally reached on the Trans Pacific Partnership. But the trade deal, which is intended to boost trade between 12 Pacific countries, faces opposition as VOA's Jim Randle reports.
Video

Video Ugandan Doctors Aid Victims of Sudan's Civil War

In Sudan's state of South Kordofan, the number of amputees as result of civil war is in the thousands, but few have access to sufficient medical help. Adam Bailes recently visited the area and says a small team of Ugandan doctors has been providing remote help, producing new prosthetic limbs for those in need.
Video

Video Calm Amid Fear in Daily Life in S. Sudan’s Town of Bentiu

Six months ago, Bentiu was a ghost town. The capital of northern Unity State, near South Sudan’s important oil fields, had changed hands several times in fighting between government forces and rebels. Calm returned in November and since then, residents of Bentiu have been trying to regain some sense of normalcy. Bentiu’s market has reopened there are plans to start school again. But fears of new attacks hang heavy, as Benno Muchler reports from Bentiu.
Video

Video US Business Groups Press for Greater Access to Cuba

President Barack Obama's decision to do all he can to ease restrictions on U.S. trade, travel and financial activities with Cuba has drawn criticism from some conservatives and Republicans. People who bring tourists to the island and farmers who want to sell more food to Cuba, however, think they can do a lot more business with Cuba. VOA's Jim Randle reports.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school

All About America

AppleAndroid