Grexit Woes

Greece Must Cling On to the Euro

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Greece shouldn't say goodbye.
  • Why it matters

    Why it matters

    Greece’s ruling Syriza movement should act on the promises it made to win power by addressing the problems of tax evasion while improving the legal and political systems.

  • Facts

    Facts

    • The eurozone would survive if Greece leaves the monetary union, but heavy financial burdens on remaining member states would continue for years.
    • Greek citizens would see their buying power diminished and their savings devalued by a Grexit.
    • Syriza promised to address Greece’s tax evasion problems.
  • Audio

    Audio

  • Pdf

A growing number of voices are saying that a Greece unwilling to pursue reforms has no future in the euro zone. They argue that by exiting the euro, the Greeks will take responsibility for their economic and monetary policies and that will make the euro zone more stable in the medium term. Meanwhile, other nations would be forced to exercise more discipline to avoid Greece’s fate.

These arguments often overlook the costs that would arise from a Grexit, not only for the Greeks but also for the euro zone. In view of these risks, the political price for compromise between Athens and its creditors would be manageable.

Greece has been wrestling with international creditors over debt for four months. So far, the government has shown little willingness to accept creditor demands for reforms in the areas of value added tax, pensions and the labor market. Additionally, Athens announced more spending that will add more red ink to the national budget. Under those circumstances, it’s unlikely the €7.2 billion ($8 billion) in additional bailout funds will be released.

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