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In a new report, Fitch Ratings says
that a hypothetical Greek exit would have limited direct, cross-border
impact on neighbouring countries. While Greek and Cypriot banks would be
severely exposed, the direct impact on most of the other eurozone banks
would be modest. Of these, banks with subsidiaries or branches in Greece
would be most affected, and the impact they faced would depend on the extent
to which they are funding Greek assets cross-border.
However, Fitch believes the indirect impact of a Greek redenomination on
banks throughout the eurozone could be severe, most notably in programme
countries as well as Spain and Italy. A robust response from policymakers
would be required to prevent contagion, and Fitch would expect a strong
public statement of commitment by the ECB and eurozone policymakers to
provide support, if required. Furthermore, this statement would need to be
backed up by specific policy actions. The willingness to extend a EUR100bn
credit line to Spain to support its banks is a clear sign of policymakers'
willingness to do what is necessary.
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