As the D-word continues to prey on Greece, the implications of a default for Greek society and the wider European community are increasingly the focus of economic analysts.
Professor of Economics at Griffith Business School, Fabrizio Carmignani, says Europe is now at a turning point, about to step into territory that has not been explored previously.
“The situation is particularly difficult,” he said. “The possible exit of Greece from the monetary union and maybe the European Union has not been explored before.
“A default would be a massive loss not only for Greece, its economy and its citizens, but also for creditors from other European countries.
“It would be massively costly on Greece as an economy, as a society. In terms of European partners there would be large losses because most of the Greek debt is held by European partners. And then, of course, there is the unknown, a possible contagion effect.
“The situation in Europe is possibly better today than a year ago but we still have many economies, including Italy, that are quite fragile. So the default and subsequent exit of Greece might trigger some contagion effect. As I said before, it’s a time of uncertainty and we are flying blind.
“Greece is in this situation because of policy mistakes that have been made primarily by Greek governments in the past. Blaming the European Union and International Monetary Fund is not helping the situation because this is creating some sort of panic within the country and this could further destabilise the financial system.”