Shadow Council

Grexit and its Discontents

Another face-to-face meeting could come tonight.
  • Why it matters

    Why it matters

    It could be another make-or-break week for Greece’s membership in the euro zone. Handelsblatt’s ECB “Shadow Council” of top economists is divided over the consequences that a Grexit would bring.

  • Facts


    • Economists supporting Grexit argued it could restore the bond markets’ supervisory function and force the remaining euro zone states to maintain fiscal discipline.
    • Detractors warned that Greece leaving the euro zone could unleash a speculative attack that would threaten the very existence of the currency union.
    • There’s also concern that a Grexit would encourage skeptical Britain to leave the European Union and provide inroads to Russia and China.
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Angela Merkel had tried her best over the past few months to keep the Greek crisis at arm’s length. Not anymore.

The German chancellor, who will host of a summit of leaders from the world’s seven top industrial nations known as the G7 this weekend, is getting her hands ever-dirtier when it comes to negotiations over whether Greece can remain inside or be kicked out of the 18 nations that form the euro currency bloc.

On Sunday night, she held “constructive” talks by telephone with Greek Prime Minister Alexis Tsipras and French President Francois Hollande. It was the second such telephone conference between the three leaders since Thursday.

The increasingly-urgent talks could continue in person Monday night. Greek officials said it was possible that Mr. Tsipras would travel to Berlin to join a meeting of Ms. Merkel with Mr. Hollande and the European Commission’s President Jean-Claude Juncker.

Ms. Merkel had hoped to keep the G7 summit itself free of talk about a Greek exit from the euro zone. But discussions on the sideline now seem unavoidable.

The crisis diplomacy led by Ms. Merkel makes one thing very clear: Negotiations have reached a decisive phase. Whether Greece gets the bailout money it needs from its international creditors or plunges into bankruptcy could be determined as early as this week.

Could the 15-year-old European currency union withstand the expulsion or exit of a member state? The question is just as polarizing for economic and finance experts as it is for politicians.

That polarization was evident at the latest meeting of the ECB “Shadow Council,” a group of top European economists Handelsblatt brings together several times of year to debate the decisions and challenges facing the European Central Bank.

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