Triplet crises and the ghost of the new drachma
Eduardo Levy Yeyati, Maria Soledad Martinez Peria, Sergio Schmukler 29 June 2011
As strikes and protests continue throughout Greece against the latest economic rescue plan, this column asks whether government inaction could lead to a run on Greek banks by ordinary depositors that would derail any existing restructuring plans and force Greece to default.
Much of the discussion surrounding the Greek crisis revolves around the probability and implications of a sovereign default and on whether the introduction of a national currency (which, for simplicity, we could call the new drachma) would help pull the Greek economy out of recession (see for example Manasse 2011 on this site). Less attention has been paid to the banking sector, which often plays a decisive role in the development of debt and currency crises.
EU policies Europe's nations and regions Global crisis
default, Greece, Eurozone crisis, triplet crises