25.05.2012
By Simon Miller
The director general of the Institute of International Finance (IIF) has warned that a Greek euro-exit would destabalise the global economy.
Echoing other warnings, Charles Dallara said that it was wrong to think that a Grexit would be manageable.
He told Italian newspaper Il Sole 24 Ore: "It is wrong to thing that if Greece left the euro, it would not have serious consequences on European banks, on the European Central Bank and on countries such as Italy Spain and Portugal because of contagion."
He added: "In addition, it would destabalise the global economy."
The IIF was in charge of negotions over private debt holders' haircut on Greek debt which led to the bailout and austerity conditions that have fed concerns over a Greek exit and Dallara called on the EU to develop a mechanism that guarantees bank deposits as a matter of urgency.
"At the moment there isn't a risk of large-scale capital flight but the uncertainty over Greece affects other countries like Spain,to the point that the market does not distinguish between the strength of the big three banks - Santandar, BBVA and Caixa - and savings banks," Dallara commented. "It is necessary that the European authorities clarify the dimensions of the problem and that we move to a targeted European intervention."
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