We do not yet know how the Greek drama will end. One possible scenario is that the EU/ECB/IMF troika will extend Greece’s bailout programme at the last moment. Such a move is feasible, since Greece is in quite a strong negotiating position, writes Professor Mats Persson at Stockholm University’s Institute for International Economic Studies.
In a debate piece in Dagens Industri, the professor makes the point that 75% of Greece’s debt is owned by the troika, and thereby indirectly by taxpayers. If the programme is not extended, and Greece goes bankrupt, the troika will be forced to report massive capital losses. The losses would be so great that the ECB’s equity would be wiped out.