Estimate: Greek euro-exodus would cost Finland EUR 5.4 billion
According to calculations by Germany’s Institute, Finland would stand to sustain losses of EUR 5.4 billion if Greece were to default on its loans and withdraw from the common European currency, the euro.
The Munich-based institute made the calculations at the request of Helsingin Sanomat.
The calculations take into account the two loan programmes granted to Greece, as well as the money owed by Greece to the European Central Bank.
A Greek withdrawal from the euro would cost Germany EUR 82 billion, while France would suffer to the tune of EUR 62 billion, Ifo says.
The combined losses for the eurozone countries in the International Monetary Fund would be EUR 308 billion.
The calculations are based on the premise that the receivables from Greece for the eurozone countries and their central banks would be completely written off.
The calculation therefore assumes that the ECB would lose its TARGET2 receivables from Greece. TARGET2 is a payment system established by the central banks of the eurozone countries.
The debts and receivables of TARGET2 reflect the credits granted in connection with monetary policy operations of the ECB. These credits include guarantees, which means that in a possible Greek default situation, it is the value of the guarantees that would determine the size of the credit losses that would be incurred from Greece’s TARGET2 debt.
Ifo is headed by Hans-Werner Sinn, a professor at the University of Munich.
Sinn has been actively involved in recent public debate in Germany. He has come out against plans for borrowing by the entire eurozone and a banking union.
He has also been critical of the activities of the ECB during the crisis. Sinn feels that Northern European countries, such as Germany, The Netherlands, and Finland have given hidden support via the European Central Bank to the seriously indebted countries of Southern Europe.
Previously in HS International Edition:
Finland sticks to conditions for aid to Greece (19.6.2012)
Finland’s industries feel effects of euro crisis (11.6.2012)