Quote:
Originally Posted by Jimbuna
Can anyone answer the question I posed earlier? What happens to to outstanding debt should Greece default, drop out of the Euro and leave the EU?
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That very much depends on the legal basis on which the debt was obtained. If I remember correctly, a lot of Greece's private debt is based on British law, but I could be wrong. There was also an article recently on what would happen to such debt in case of default, but for the life of me, I cannot find it right now.
With the majority of the debt being to the EU Member States (the first bailout), the EFSF/ESM (second bailout) and the IMF, however, the debate on what happens to the debt turns very nasty and complicated. And that's not counting Greece's TARGET 2 obligations (I have no idea how precisely they work, just that they are an extra burden to other EZ states) and the Emergency Liquidity Assistance, which must also be kept on the ECB's books and is probably not (fully) covered by the collateral given by Greek banks.
To summarize, no one know exactly, but it still exists and if Greece ever wanted to return to the credit markets in the future, it would have to pay it off with its new currency that would lose its value by the minute.