Greece eurozone departure to destabilize world economy: IIF

MILAN — The head of the global banking lobby which handled the private debt write-off for Greece warned that if the country leaves the eurozone, the world economy would suffer badly.

The head of the Institute of International Finance (IIF), Charles Dallara, also urged the European Union to set up a system to guarantee savers’ deposits in banks.

And he suggested that the timetable for eurozone governments with severe debt problems to correct their public finances should be eased to allow time for growth to ease the effort, arguing for a “more realistic” approach.

Banks in Greece and Spain in particular have been weakened recently by heavy withdrawals of savings.

“It is a mistake to think that an exit by Greece from the eurozone will not have a very serious effect on the European banks, on the ECB (European Central Bank), on countries like Italy, Spain and Portugal due to contagion,” he told Il Sole 24 Ore newspaper.

“Furthermore, it would destabilize the whole world economy,” he said.

The IIF represents leading banks around the world, notably on the restructuring of private debt. — AFP