The Horsemen of the Apocalypse are in Athens again. Officials from the European Union, International Monetary Fund and European Central Bank are there to review Greece’s €110bn assistance package. They have two new factors to contend with since their last visit. First, Greece needs more money. Second, Brussels and Athens have been unsettled by speculation that Greece was considering leaving the eurozone. No matter how vehemently Athens protests, this notion is not going away.
There is no mechanism for leaving the eurozone. But even Alcatraz was not immune to escape. Leaving is possible, however, only with the most careful planning. Some steps are obvious. The move would have to be well flagged. Investors may already be pricing it into Greek bond markets, so it would hardly be a surprise. As Capital Economics argues, it is likely that fears of a Greek exit will increase over time.
Athens would need to have an alternative currency and a strong candidate for central bank governor lined up with a hotline to the ECB. It would also need to have an emergency credit line in place for its banks, which hold €72bn or 22 per cent of the country’s outstanding debt. Then the government would need to get its arguments straight to convince investors to start buying Greek assets again.