Greek crisis

Greek Default Would Cause’ Monstrous’ Run on Banks

Bloomberg

9 September, 2011

Nobel-prize winning economist Robert Mundell, whose research contributed to creation of the euro, said a Greek default would trigger a run on banks of “monstrous proportions.”

“This risk means that issues in Greece and the euro area are an international problem,” Mundell told reporters in Budapest today.

The European Central Bank and the Federal Reserve should introduce a “very large” swap facility, in the range of $1 trillion, to tackle any potential dollar shortage, Mundell said.

Mundell, who is a professor of economics at Columbia University in New York, also said no country should leave the euro area because it “doesn’t solve any of the problems.”