Will a Collapse of Greek Banks Kick the Country Out of the Euro Zone?

8 Pages Posted: 28 Apr 2015

See all articles by Eric Dor

Eric Dor

Catholic University of Lille - Institut d'Économie Scientifique et de Gestion (IESEG)

Date Written: April 27, 2015

Abstract

Deposit outflows and a decrease of interbank funding have been compensated by increased borrowing of Greek banks to the Eurosystem. Due to collateral eligibility constraints, most of this funding shifted to ELA. The ECB could raise the haircut rates on the collateral pledged by Greek banks to obtain funding from the Eurosystem. The impact of several scenarios of haircut increases are simulated. Insufficient Eurosystem funding could lead Greece to abandon the euro zone.

Keywords: ECB, ELA, Eurosystem, haircut, bank

JEL Classification: E58, F31, F33, F34, F53, E51, E50

Suggested Citation

Dor, Eric, Will a Collapse of Greek Banks Kick the Country Out of the Euro Zone? (April 27, 2015). Available at SSRN: https://ssrn.com/abstract=2599558 or http://dx.doi.org/10.2139/ssrn.2599558

Eric Dor (Contact Author)

Catholic University of Lille - Institut d'Économie Scientifique et de Gestion (IESEG) ( email )

3 Rue de la Digue
Lille Paris, 59000
France

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