FRANKFURT (Reuters) – A Greek exit from the euro would expose the European Central Bank to losses of tens of billions, a hole that might have to cover Germany and other members.
While the political tug of war with Athens freeze the country’s access to loans from members of the eurozone, Greece has been using more funds from the ECB at a time.
The Greek government insists it will remain part of the Eurozone, but uncertainty led the ECB to examine the impact of a possible “Grexit” or Greek exit from the eurozone, said sources familiar with theme, discovering a possible big bill for Central Bank and eurozone countries that fund.
Any loss of that kind would be added to a default of some or all Greek public debt of more than 320,000 million euros (349,000 million) and provide another reason to keep Athens within the fold.
The account of the ECB could move to the countries of the euro area because the central bank is an organization created by them.
“If one goes, the rest have to absorb the costs,” said Stavros Zenios, an academic and member of the board of directors of the Central Bank of Cyprus.
“Those who remain are left with an increasing load. The loss will be absorbed by member states such as Italy and Spain Are in a position to absorb this loss?” He said.
The ECB declined to comment on any potential liability that may face.
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The full extent of the risk to the ECB is complex because unravel support for Greece would raise a mountain of legal issues that could take years to respond .
Some of the different liabilities overlap. It is also unclear to what extent the account would be unpaid. But the risks can be identified.
The ECB president Mario Draghi recently said funding for Greece amounted to 104,000 million euros.
This sum, including around 38,000 million euros that Greek banks borrowed the ECB emergency funding from the central bank, is increasing.
But not reflect the full extent of ECB support. In case of default, there will probably be an impact by “discovered” that Greece currently has in the payment system in the euro area.
Under the “Target2″ system, when a bank in Greece transfers money to Germany to pay, for example, an imported machine records a liability at the ECB to reflect the movement of money.
The German Bundesbank receive a credit through the ECB, while the Central Bank enters Greek red. Greece is a net importer and has been suffering from capital flight.
This deficit is virtual to the extent that the eurozone remains intact, but if a country goes, could manifest itself in a loss.
The other euro countries may have to compensate the missing or write it down as a loss. In this area, Greece now has a red 91,000 million euros, according to the central bank.
In the worst case, the central banks of the euro zone would have to go on governments to take fresh capital to cover the hole.
“Leaving the eurozone would not extinguish liabilities of Greece. The rest of the euro system would have to pass lost most of their claims on the Greek central bank,” said Willem Buiter, chief economist US bank Citi. “You can not get blood from a stone.”
In addition, the ECB has about 18,000 million euros in Greek bonds, which probably worth only a fraction of its nominal price when the country leave the eurozone.
And there are 40,000 million euros in bills, many of which are “under the mattress” in Greece, which represent another person, said three people familiar with the matter.
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