IIF warns of €1 trillion risk if Greece defaults

A DISORDERLY Greek default would cause more than €1 trillion (£833bn) of damage to the Eurozone and could leave Italy and Spain dependent on outside help to stop contagion spreading, the main bondholders’ group has said.

“There are some very important and damaging ramifications that would result from a disorderly default,” the IIF said in a letter to bondholders.

“It is difficult to add all these contingent liabilities up with any degree of precision although it is hard to see how they would not exceed €1 trillion.”

Greek private creditors have until tomorrow night to say whether they will participate in a bond swap.

Greece ratcheted up the pressure on bondholders to sign up after signalling it will make the offer binding and force losses on those who do not volunteer if it gets enough support from its other creditors.