Eurozone Readies For A Grexit

With just two weeks to go until Greece is set to hold its national elections, the radical leftist Syriza party led in the polls over the weekend. The world has been watching developments in the tiny eurozone country because despite its size, Greece may make waves if the Syriza party comes into power.

The party has promised to review the terms of Greece's bailout program and demand a debt write off from the country's lenders. In doing so, many believe Syriza will be taking the first steps toward the Greece's eventual exit from the eurozone.

Though a Grexit is still only one possible outcome, many are already beginning to prepare for the fallout. While German officials released statements earlier this month saying that the bloc would survive without Greece as a member, German Chancellor Angela Merkel's office said the conditions of Greece's loan repayment may relax if it continues in its bailout program. Germany has been firmly against a write-off, but has shown signs of softening its position with the possibility of a Grexit on the table.

Banks operating in the Eurozone are battening down the hatches in case of a Grexit, as the financial sector would likely be the hardest hit. Despite the fact that most believe Greece's exit from the currency union is unlikely even if Syriza take power, eurozone banks are no stranger to to hard times and have begun to prepare for the worst. The Wall Street Journal reported that

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are looking into the impact a Grexit would have on cross-border funding and shoring up their balance sheets. Others are analyzing how the addition of a Greek currency would impact their payment systems and trading platforms in order to prevent a breakdown.

Probably the most worrisome issue for companies operating in the eurozone is the domino effect that a Grexit would have on the union as a whole. Although the region's policymakers have said they can cope with Greece leaving the eurozone, most economists believe that Greece leaving would be the beginning of the end for the bloc as a whole. One nation's exit will set a precedent and make it easier for others to follow, so the real issue that companies face in the case of a Grexit is a loss of confidence in the region, something they can do very little to prepare for.