Europe Asks if Greece Could Default Without Exiting Euro
BRUSSELS—With no deal in sight on Greece’s foundering international bailout, some policy makers are examining a new idea: Could the government in Athens default on its rescue loans and still keep the euro as its currency?
That line of thinking breaks with the conventional wisdom of more than five years of debt crisis, where the shock of a default was seen as sending Greece down an inexorable path of bank runs, capital controls and, finally, exit from the eurozone.
Yet, with the risk of nonpayment higher than ever, finding a way to avoid the chaos of a Greek currency switch is looking more attractive. It could spare Europe the embarrassment of one of its members crashing out of the eurozone and dampen some of the market panic that would likely follow a default.
The idea of keeping Greece in the euro despite a default was briefly discussed by senior officials from eurozone finance ministries last week, although many of them harbor serious doubts about whether it would work, according to people familiar with the talks.
“It is not so much a plan, but an evolution in the thinking,” says one person familiar with the discussions among Greece’s creditors.
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http://www.wsj.com/articles/europe-asks-if-greece-could-default-without-exiting-euro-1434397500
