Generate text that refutes this claim: Defaulting would cause chaos in Greece  There is no good solution for the crisis Greece finds itself in, only less bad ones. Austerity measures imposed on Greece may currently be causing suffering, but austerity is the least bad option available for the Greek people: default would be considerably worse. Here is what would most likely happen:  The Greek banking sector would collapse [1]. A large portion of the Greek debt is owed to Greek banks and companies, many of which would quickly go bankrupt when the Government defaults. This is also because Greek banks are almost totally reliant on the ECB for liquidity. [2] People would consequently lose their savings, and credit would be close to impossible to find.  The Government would quickly devalue the Drachma by at least 50%. This will lead to imported goods being more expensive and consequently to a huge rise in inflation with the living costs increasing tremendously.[3]  These two events would lead to a severe shortage of credit, making it almost impossible for struggling companies to survive. Unemployment would soar as a result. It will become increasingly difficult to secure supplies of oil, medicine, foodstuffs and other goods. Naturally, those hit worst would be the poor. The Government, in this respect, would be failing on an enormous scale in providing many citizens with the basic needs. [4]  [1] Brzeski, Carsten: “Viewpoints: What if Greece exits euro?”, BBC News, 13 July 2012,   [2] Ruparel, Raoul and Persson, Mats: “Better off Out? The short-term options for Greece inside and outside of the euro”, June 2012, Open Europe, 2012   [3] ibid  [4] Arghyrou, Michael: “Viewpoints: What if Greece exits euro?”, BBC News, 13 July 2012,
conomic policy eurozone crisis finance international europe politics government
It is not necessarily true that the whole banking sector in Greece would collapse. Given that the default would be orderly and take place within the context of the European Union, the ECB and European Commission would still provide substantial liquidity aid for Greek banks. Moreover it is not true that a devaluation of domestic currency necessarily leads to high inflation – this was not the case, for example, when Britain exited the European Exchange-rate Mechanism in 1992 and pursued a devaluation policy of the British Pound. [1] Lastly, evidence of recent governments that have defaulted suggests that even though some of the harms the opposition refer to may actualise, recovery generally follows fairly quickly, as was the case with Argentina, South Korea and Indonesia. [2]  [1] Ruparel, Raoul and Persson, Mats: “Better off Out? The short-term options for Greece inside and outside of the euro”, June 2012, Open Europe, 2012   [2] Becker, Garry: “Should Greece Exit the Euro Zone?”, The Becker-Posner Blog, 20.5.2012,