Greek Default More Problematic Than Bank Run

While Greek bank deposits fell at an accelerated pace last week, that alone won't likely cause the country to leave the euro zone, says Wells Fargo. Even if deposit outflows rose to EUR5-10B/month, the ELA has the capacity to replace those deposits, it contends. But more concerning to Wells is Greece's EUR3.8B bond payment due in August and the EUR11.8B that need to be rolled over by September. If the Greek government elected in June fails to secure future aid installments from the EU, "it could quickly run short of cash," leading to a default and Greek exit of the euro zone, predicts Wells. That scenario might send the euro to as low as $1.10, with commodity and emerging-market currencies dropping 5-10%.

Greek Default More Problematic Than Bank Run

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