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Study: Germany gains from Greek debt crisis

By Tomas Monzon
Munich, Germany. A study released Tuesday by the Halle Institute for Economic Research (IWH) claims Germany has benefited from the Greek debt crisis. Photograph by Mapics/Shutterstock
Munich, Germany. A study released Tuesday by the Halle Institute for Economic Research (IWH) claims Germany has benefited from the Greek debt crisis. Photograph by Mapics/Shutterstock

HALLE, Germany, Aug. 11 (UPI) -- A study released Tuesday by the Halle Institute for Economic Research (IWH) claims Germany has benefited from the Greek debt crisis.

The organization claims that the German government has saved about $109 billion dollars in lower borrowing costs - more than three percent of its gross domestic product (GDP) - because the Greek crisis has led investors to seek safety in German bonds. Even if Greece defaults on the entirety of its debt, Germany would still benefit.

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The study also found that the German government bond yields reacted quickly to news coming out of Greece. Each time that Greece's exit from the European union seemed more likely; bond yields decreased. On the contrary, whenever Greece's exit seemed less likely; bond yields increased. Medium- and long-term bonds that are years away from maturing assure Germany's profits independent of the outcome of the crisis.

Greece is looking to reach a third bailout agreement with its creditors this week. Germany has funded a significant portion of Greece's bailout so far and demands tough conditions for any new deal. The terms of the new bailout need to be ironed out by Aug. 20, when Greece must make its next debt repayment to the European Central Bank. Greek officials said that these negotiations are almost complete, which individuals in Berlin claim were not as confident.

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German Chancellor Angela Merkel's spokesman said "thoroughness comes before speed." Priorities differ amongst the countries involved, with Germany wanting Greece to sign up for pension reforms and privatization plans and Greece seeking urgent funding to revitalize its banks.

RELATED Greek bailout deal nearly complete for more than $90B in financing

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