European Central Bank review highlights Greek default risk

The European Central Bank published its latest Financial Stability Review, according to which the risk of a Greek default has…

The European Central Bank published its latest Financial Stability Review, according to which the risk of a Greek default has suddenly increased over the past six moths, due to the degree of political uncertainty.

In its review, the ECB notes that due to the political uncertainty in Greece, the banking sector has suffered from a major outflow of deposits and has lost access to funding from the credit market.

Furthermore, the reactions of the credit markets to the Greek developments have so far been limited, however further should there be further delays in reaching an agreement “the risk of an upward adjustment of the risk premia demanded on vulnerable euro area sovereigns could materialize”.

The ECB also underlines in its review that the job market conditions in Greece and Spain remain unfavorable and details that the real estate market in Greece, as well as Cyprus and Slovenia, is under significant pressure.

The ECB review is available online.

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