The case of Greece differs from that of Argentina

Similarities and critical differences that make possible and most certainly a different outcome for Greece, were distinguished by Eurobank EFG between the crisis in Argentina in 2001 and the current crisis in Greece. In the last issue of the periodical market and economy, issued today by the Department for Economic Studies and Forecasts of Eurobank EFG, the final outcome was stressed with Greece not specified as there are significant differences in the case of Argentina. A key difference, according to the bank, is the fact that Greece participates in a monetary union. “We unilaterally peg its currency to a stranger, but replaced by the euro. The credibility of the policy of maintaining a fixed parity with the dollar in Argentina was under constant and growing challenge. In Greece, leaving the euro is not legally possible.

Moreover, Greece has not faced speculative attacks on the country’s reserves and degrading the currency. ECB also operates as lender of last resort and the Greek banking system is much more powerful and faces risks from the existence of two currencies. Another element that distinguishes the case of Greece from that of the Argentina is the mechanism to support the EU, the ECB and IMF.
Greece’s banking system is much more powerful with sufficient capital adequacy ratio and liquidity, and unlike Argentina faces no currency risk and the European System of Central Banks can act as a lender of last resort. According to Eurobank, political stability and social consensus in GreeceIn contrast to Argentina, where all the effort failed and the political instability and the inability to enforce change through socially just manner. ” Greece recognizes the danger of deepening a recession which is why the program is long term and is trying to meet a balance.”

In conclusion, the Bank stresses that the final outcome for Greece depends on the efforts to change the growth pattern of the Greek economy and our overall workings of the state and society. Adherence to the memorandum of understanding, solid policy positions and creating a climate of social consensus is surely needed.