According to UBS Greece would see a 50% collapse in GDP. The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak Euro country leaving the Euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That cost would then probably amount to EUR3,000 to EUR4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.
The graph at the right shows the scale and maturity of ECB and NCB holdings of Greek debt. While it would be difficult to actually render the ECB insolvent, such losses would nonetheless alarm investors worried about its credibility. Further, NCB exposure to the Greek central bank via TARGET II transferswhich allow NCBs to fund bank withdrawals with money not currently in the countrywill likely result in even deeper losses.
“According to UBS Greece would see a 50% collapse in GDP.”
Which is in line with what happened in Iceland.
If you walk in the door with US Dollars in Iceland these days, they treat you like a King.