Bloomberg News

Greek Euro Exit to Hurt Confidence in Eastern Europe, Mirow Says

May 15, 2012

Thomas Mirow, president of the London-based European Bank for Reconstruction and Development, which supports economic transition in the former Communist east, comments on the effects of Greece’s potential departure from the euro on the countries where the bank invests.

Mirow spoke to reporters in London today.

On investor confidence:

“As we have seen with Lehman, these types of events are very difficult to forecast because they have a material aspect, a hard, physical element, but they also have a psychological element.

‘‘For many major investors in Asia, the Pacific or the Americas, it’s about Europe and they would probably not exactly differentiate between one or the other smaller countries.

‘‘Nobody knows what exactly would be the effects and whether international investors still would have trust that Greece is as singular as the Europeans up to now have described it to be. There can be knock-on effects because Greek banks play a role in the region in some countries and an important one. But any scenario how would this exactly be realized is theory.’’

On contagion through trade and banking links:

‘‘The trade channel, which is the most important between the euro area and central Europe, is having an impact because of slowing demand from the western parts of Europe and the southern parts of Europe.

‘‘It comes on top that we see an ongoing process of deleveraging of western banks making credit and loans more difficult to access, especially for small and medium-sized companies. That is an effect, which has already played out, regardless of what still may come with regard to Greece, which nobody knows now.’’

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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