The Council On Foreign Relations points out that Greece has been issuing it debt in euros and not drachma for some time.
“Greece consistently relied on non-drachma debt issuance well before it adopted the euro in 2001. In the six years before joining the euro, only 27% of Greek debt was issued in drachma. At the end of 2000, just before Greece joined the eurozone, 79% of its outstanding debt was already denominated in euros, and a mere 8% in drachmas. Even if Greece had remained outside the eurozone, its dependence on euro borrowing would only have increased.”
Greece is not in a position to improve its borrowing status by trying to raise money in its own currency. It has effectively increased its reliance on the euro since it joined the Eurozone. Long before that it had begun borrowing in currencies other than its own.
That makes the math of a default more complex and may be why the Euro nations are in such a rush to aid Greece. That and the 140 billion euro of Greek sovereign debt held by European banks with France with the largest exposure followed by Germany.
A Greek default crushes the balance sheets of many of the region’s largest financial firms.
With thanks to Zerohedge
Douglas A. McIntyre
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