(Newswire.net — June 17, 2015) — Athens, Greece – If Greece fails to reach an agreement to receive a 7.2 billion Euro bailout credit, and it looks like it will, the country most likely would exit the Eurozone or even the EU, the Bank of Greece said in a statement Wednesday.
“Failure to reach an agreement would…mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union,” the statement read.
What will happen if Greece leaves the Euro area and the European Union?
According to the Telegraph, ‘Grexit’ means Greece will abandon the euro as currency and revive the national volute Drachma. When that happens, the first blow will take down Greek banks as the European Central Bank would withdraw the support and companies would immediately pull accounts Greek banks.
Approximately, at the same time, millions of people would rush the banks in a desperate frenzy to retrieve their savings. However, the money would already be gone and only thing Greece could do at the time would be to print more money, the Telegraph analyzed.
Printing money would likely lead to rapid inflation and a drastic increase of prices that would inevitably lead to a social protests erupting all over the country. Eventually, the monetary situation would normalize, but many businesses would go bankrupt and millions would be left without jobs or maybe even lose everything. Greece already has a 20 percent unemployment rate.
So why is Greece going bankrupt relevant to the rest of the world?
Following the steps Island made, Greece would eventually rise from the ashes of a bad economy as a free country. Today it is deep in debt slavery without a chance to stabilize it’s own economy. According to the Telegraph, Greece will nationalize banks before leaving the European Union. Greece would have to sell its assets and could acquire enough money to kick-start its economy. For example, China wants the Greek port of Piraeus to become its ‘gateway to Europe,’ Deutche Welle reported. The European Union is currently blocking such a trade, but if Greece left the EU, they would be able to follow their own interests.
There is however one potential negative result of Greece leaving the European Union in order to strengthen their economy. It would serve as an example of how it could be possible to survive and strengthen an economy by exiting the EU. Other countries like Spain could potentially do the same. The world’s monetary system is actually very fragile and every single tremor is like a quake in some less stable markets, but ‘Grexit’ could potentially shake the whole system and lead to unpredictable consequences.
According to financial experts who have done long-term analysis of the Grexit effects, by denying the last 7.2 billion-bailout tranche to Greece, the European Union could actually be shooting themselves in the foot.