<p>Who would pay depends on the terms of the default. Sometimes holders of similar debts are not treated equally, and this can play out in different ways. Greeks could default on external debts but continue to pay internal creditors. Or because the ESM and other entities are providing ongoing financing, perhaps they will continue to be repaid when others are not to keep those spigots open. Or, less extremely, they could vary the degree of forbearance, term changes, and extent of default. </p>

<p>I found the following two charts from 2013 and 2014 helpful for understanding who are the current holders of Greek public debt and how that compares with other rich countries.</p>

<p><img src="https://i.sstatic.net/SEpMQ.jpg" alt="Pie chart Greek debt Q3 2014"></p>

<p><img src="https://i.sstatic.net/haPIt.png" alt="who owns national debt">
Source: <a href="https://twitter.com/StarlingCityF/media" rel="noreferrer">STARLING CITY</a>  </p>

<p>Update:
I couldn't find a time series of the holders of Greek debt but here are some additional charts to see the evolution. The first one is more comparable to the pie chart above than the second one which shows only bank holdings. If this is of interest, the <a href="http://www.bis.org/statistics/consstats.htm" rel="noreferrer">BIS's consolidated banking statistics</a> could be used to create a time series of the bank holdings of Greek debt</p>

<p><img src="https://i.sstatic.net/Cgxw5.jpg" alt="Pie chart Greek debt Q4 2012">
<img src="https://i.sstatic.net/nUI8y.gif" alt="Pie chart Greek debt sometime in 2010"></p>

CC BY-SA 3.0
2015-03-01T22:05:02.840Z
Great charts, BKay. Is there the same data in dynamics, i.e. how the Greek debt holders structure evolved over time?
Anton Tarasenko
CC BY-SA 3.0
2015-03-05T15:32:18.220Z
BKay, thanks for the update. I also tried to find the pre-2008 data, but couldn't. The point is: if Greece defaulted shortly after 2008, the losers would be French and German private banks. But I can't find a clear evidence that before the bailout season, private banks and funds held the Greek debt. And by 2015, the problem turned out to be public, instead.
Anton Tarasenko
CC BY-SA 3.0
2015-02-27T13:28:49.223Z
2015-06-30T00:14:48.953Z
2015-06-30T00:14:48.953Z
BKay
<p>I'd add a historical perspective to the great answers already given. The data from a very illustrative article "<a href="http://www.iie.com/publications/wp/wp13-8.pdf" rel="nofollow noreferrer">The Greek Debt Restructuring: An Autopsy</a>" by Jeromin Zettelmeyer, Christoph Trebesch, and Mitu Gulati.</p>

<h2>The private creditors would bear the losses if Greece defaulted before March 2012</h2>

<p>These organizations held the Greek debt by 2011:</p>

<p><img src="https://i.sstatic.net/mJYE3.png" alt="enter image description here"></p>

<h2>The debt became public in March-April 2012</h2>

<p>Zettelmeyer et al.:</p>

<blockquote>
  <p>After a €200 billion debt exchange in March/April 2012 and a buyback
  of a large portion of the newly exchanged sovereign bonds in December,
  the amount of Greek bonds in the hands of private creditors was down
  to just €35 billion—just 13 percent of where it had stood in April
  2010, when Greece lost access to capital markets.</p>
</blockquote>

<p><img src="https://i.sstatic.net/QyDvN.png" alt="enter image description here"></p>

<h2>The citizens of the EU would pay the bill now</h2>

<p><img src="https://i.sstatic.net/e5Vp1.png" alt="enter image description here"></p>

CC BY-SA 3.0
2016-05-12T05:38:37.400Z
Is it me or your images are all missing?
clem steredenn
CC BY-SA 3.0
2015-05-08T01:10:40.210Z
2015-05-08T01:10:40.210Z
Anton Tarasenko
<p>We have first to be clear about what meaning do we give to the word "default". The other answer gave it a temporary meaning ("missing a payment deadline"). In such a case, any <em>direct</em> economic effect is bound to be small (expecially if the delay is short). But there may be <em>indirect</em> economic consequences through the effect on economic expectations.</p>

<p>Now let's give to the word "<strong>default</strong>" a heavy meaning: "<strong>non-payment ever of principal and interest</strong>", then there will be various direct and indirect effects:</p>

<p>The debt market loses Supply, reducing loan opportunities for other debtors. Creditors become more conservative and stringent towards prospective debtors, in view of the loss... in general the debt market suffers -and with it any beneficial economic activity that may need debt financing.</p>

<p>Creditors lose current income (the interest), and also become less wealthy. So their financial health worsens which affects directly their level of current engagement in economic activity, and also, their plunging into new economic activity, and so, the future. If the end-creditors are  states, then their Government Budget suffers which may indeed lead also to higher taxation.</p>

<p>Consider now the following "economic fantasy" twist: Assume that a debtor state announces: <strong>"We cannot say when we will be able to start repaying the principal amount of the debt, but we will duly and fully pay the interest accrued in the meantime".</strong>... Is there a "bill to be footed" here? It would be very interesting to see what the consequences of such a situation would be. Unfortunately, in Social Sciences, there are all shorts of very interesting experiments that we cannot really execute, so we can only theorize about them, and hope for a "natural experiment" to emerge...</p>

CC BY-SA 3.0
2015-03-05T18:01:41.227Z
Alecos, don't you know any sources (perhaps in Greek) that describe the holders of the Greek public debt as in 2005–2008? Were they private investors or other sovereigns?
Anton Tarasenko
CC BY-SA 3.0
2015-03-05T19:31:42.503Z
@Anton The stats for these periods have been revised more than once, and it will be difficult to find reliable information. I will have a look though.
Alecos Papadopoulos
CC BY-SA 3.0
2015-02-27T02:26:15.633Z
2015-02-27T02:26:15.633Z
Alecos Papadopoulos
<p>You are correct. The majority of Greek sovereign debt is held by other EU sovereigns. So EU taxpayers end up footing the bill in the event of a Greek default. Usually, rather than outright defaulting (i.e. missing a repayment deadline), there will be some agreement to restructure the debt so that Greece gets more time or some other form of concession.</p>

<p>So the EU and Greece will both talk tough on TV to please their respective electorates, but both sides know that a genuine default would spell catastrophe for the entire European economy and so will do everything they can to avoid it.</p>

CC BY-SA 3.0
2015-02-22T13:13:08.927Z
2015-02-22T13:13:08.927Z
needHelp
<p>The answer is above. One important point to note that the other contributers missed is the effect of a default on derivative markets and greek corporations. Greek corporations credit ratings are heabily affected by the rating of the Greek Goverment. If Greece defaults or <strong>defaults</strong> on a payment (misses or restructures) their credit rating will be stronly negativley affected. This is likely to have a knock-on effect to greek corporation which will be negativley affected as well. Finally, if the greek goverment is defaulting on foreign obligations, it is likely that local obligations will not be met either (local goverment contractors, pensions etc.). This would harm the greek economy.</p>

<p>In terms of derivatives and financial markets many instruments such as greek goverment CDS (Credit Default Swaps - essentially a contract where one side pays the other if greece defaults by a certain time) would be triggered or affected by a default.</p>

<p>So to answer your question - in addition to the holders of the actual debt described above by other commentators - a lot of people would 'pay for it' while the owners of CDSs would benefit.</p>

CC BY-SA 3.0
2015-05-08T16:00:58.967Z
2016-05-12T05:17:39.870Z
2016-05-12T05:17:39.870Z
Stuart Allan
<p>Two additional issues that are not clear in the other answers:</p>

<p>A) In theory, it is those that have given credit to a bad borrower that will pay the cost of that mistake. A bank always has a list of loans that it cannot recover, and are losses. In this case, that would be the private banks that originally lent money to Greece. However, the way we have organized our banking systems, a big hit to a bank leads to a financial crisis unless the bank is rescued. In this case, that means that although it seems that a lot of the burden would fall on private investors/ banks, in the end its is often the public sector and therefore the regular citizens of a country that end up paying for the default.</p>

<p>B) In these cases, the issue of 'debt seniority' is important. Often the IMF will only lend if its debt is senior to all the others. This means that in many cases not all the debt is equally risky and a default would hit private lenders before it hits sovereign lenders and then finally 'IFI' lenders (IMF, WB,etc).</p>

<p>C) A potential part of the solution is the bail-in as in Cyprus, in which large bank deposit accounts were reduced with a 'levy' of around 40% on any money above a 100,000 level...</p>

CC BY-SA 3.0
2016-03-29T15:32:17.373Z
2016-05-12T03:39:40.177Z
2016-05-12T03:39:40.177Z
Fix.B.
<p>Apologies if the topic is not appropriate (economics newbie here) but I am curious as to who <em>exactly</em> would foot the bill if Greece defaults on the ~300 billion dollars it owes. It looks like most of the money is owed to EU, IMF and ECB but what does that really mean in layman terms? Does it mean that tax-payers in other (mostly EU) countries end up paying one way or the other.</p>

CC BY-SA 3.0
2015-02-21T18:57:39.310Z
I would remove the second paragraph and perhaps, conditional on an answer here, rephrase it as a separate question. It's quite distinct and might make the question and good answers too broad/lengthy.
FooBar
CC BY-SA 3.0
2015-02-22T06:05:23.880Z
I have edited the question.
stali
<government-debt><nonexpert>
Who exactly foots the bill if Greece defaults
stali
# Who exactly foots the bill if Greece defaults

(Asked by: username_0 on 2015-02-21)

Apologies if the topic is not appropriate (economics newbie here) but I am curious as to who *exactly* would foot the bill if Greece defaults on the ~300 billion dollars it owes. It looks like most of the money is owed to EU, IMF and ECB but what does that really mean in layman terms? Does it mean that tax-payers in other (mostly EU) countries end up paying one way or the other.

**Tags:** government-debt, nonexpert
> **Comments:**
> **username_1**: I would remove the second paragraph and perhaps, conditional on an answer here, rephrase it as a separate question. It's quite distinct and might make the question and good answers too broad/lengthy.  
> **username_0**: I have edited the question.  

---

## 6 answers

### Answer by username_2 on 2015-02-27. Score: 21

Who would pay depends on the terms of the default. Sometimes holders of similar debts are not treated equally, and this can play out in different ways. Greeks could default on external debts but continue to pay internal creditors. Or because the ESM and other entities are providing ongoing financing, perhaps they will continue to be repaid when others are not to keep those spigots open. Or, less extremely, they could vary the degree of forbearance, term changes, and extent of default.

I found the following two charts from 2013 and 2014 helpful for understanding who are the current holders of Greek public debt and how that compares with other rich countries.

![Pie chart Greek debt Q3 2014](https://i.sstatic.net/SEpMQ.jpg)

![who owns national debt](https://i.sstatic.net/haPIt.png)
Source: [STARLING CITY](https://twitter.com/StarlingCityF/media)

Update:
I couldn't find a time series of the holders of Greek debt but here are some additional charts to see the evolution. The first one is more comparable to the pie chart above than the second one which shows only bank holdings. If this is of interest, the [BIS's consolidated banking statistics](http://www.bis.org/statistics/consstats.htm) could be used to create a time series of the bank holdings of Greek debt

![Pie chart Greek debt Q4 2012](https://i.sstatic.net/Cgxw5.jpg)
![Pie chart Greek debt sometime in 2010](https://i.sstatic.net/nUI8y.gif)

> **Comments:**
> **username_3**: Great charts, BKay. Is there the same data in dynamics, i.e. how the Greek debt holders structure evolved over time?  
> **username_3**: BKay, thanks for the update. I also tried to find the pre-2008 data, but couldn't. The point is: if Greece defaulted shortly after 2008, the losers would be French and German private banks. But I can't find a clear evidence that before the bailout season, private banks and funds held the Greek debt. And by 2015, the problem turned out to be public, instead.  

---

### Answer by username_3 on 2015-05-08. Score: 11

I'd add a historical perspective to the great answers already given. The data from a very illustrative article "[The Greek Debt Restructuring: An Autopsy](http://www.iie.com/publications/wp/wp13-8.pdf)" by Jeromin Zettelmeyer, Christoph Trebesch, and Mitu Gulati.

## The private creditors would bear the losses if Greece defaulted before March 2012

These organizations held the Greek debt by 2011:

![enter image description here](https://i.sstatic.net/mJYE3.png)

## The debt became public in March-April 2012

Zettelmeyer et al.:

> After a €200 billion debt exchange in March/April 2012 and a buyback
> of a large portion of the newly exchanged sovereign bonds in December,
> the amount of Greek bonds in the hands of private creditors was down
> to just €35 billion—just 13 percent of where it had stood in April
> 2010, when Greece lost access to capital markets.

![enter image description here](https://i.sstatic.net/QyDvN.png)

## The citizens of the EU would pay the bill now

![enter image description here](https://i.sstatic.net/e5Vp1.png)

> **Comments:**
> **username_4**: Is it me or your images are all missing?  

---

### Answer by username_5 on 2015-02-27. Score: 3

We have first to be clear about what meaning do we give to the word "default". The other answer gave it a temporary meaning ("missing a payment deadline"). In such a case, any *direct* economic effect is bound to be small (expecially if the delay is short). But there may be *indirect* economic consequences through the effect on economic expectations.

Now let's give to the word "**default**" a heavy meaning: "**non-payment ever of principal and interest**", then there will be various direct and indirect effects:

The debt market loses Supply, reducing loan opportunities for other debtors. Creditors become more conservative and stringent towards prospective debtors, in view of the loss... in general the debt market suffers -and with it any beneficial economic activity that may need debt financing.

Creditors lose current income (the interest), and also become less wealthy. So their financial health worsens which affects directly their level of current engagement in economic activity, and also, their plunging into new economic activity, and so, the future. If the end-creditors are states, then their Government Budget suffers which may indeed lead also to higher taxation.

Consider now the following "economic fantasy" twist: Assume that a debtor state announces: **"We cannot say when we will be able to start repaying the principal amount of the debt, but we will duly and fully pay the interest accrued in the meantime".**... Is there a "bill to be footed" here? It would be very interesting to see what the consequences of such a situation would be. Unfortunately, in Social Sciences, there are all shorts of very interesting experiments that we cannot really execute, so we can only theorize about them, and hope for a "natural experiment" to emerge...

> **Comments:**
> **username_3**: Alecos, don't you know any sources (perhaps in Greek) that describe the holders of the Greek public debt as in 2005–2008? Were they private investors or other sovereigns?  
> **username_5**: @Anton The stats for these periods have been revised more than once, and it will be difficult to find reliable information. I will have a look though.  

---

### Answer by username_6 on 2015-02-22. Score: 3

You are correct. The majority of Greek sovereign debt is held by other EU sovereigns. So EU taxpayers end up footing the bill in the event of a Greek default. Usually, rather than outright defaulting (i.e. missing a repayment deadline), there will be some agreement to restructure the debt so that Greece gets more time or some other form of concession.

So the EU and Greece will both talk tough on TV to please their respective electorates, but both sides know that a genuine default would spell catastrophe for the entire European economy and so will do everything they can to avoid it.


---

### Answer by username_7 on 2015-05-08. Score: 2

The answer is above. One important point to note that the other contributers missed is the effect of a default on derivative markets and greek corporations. Greek corporations credit ratings are heabily affected by the rating of the Greek Goverment. If Greece defaults or **defaults** on a payment (misses or restructures) their credit rating will be stronly negativley affected. This is likely to have a knock-on effect to greek corporation which will be negativley affected as well. Finally, if the greek goverment is defaulting on foreign obligations, it is likely that local obligations will not be met either (local goverment contractors, pensions etc.). This would harm the greek economy.

In terms of derivatives and financial markets many instruments such as greek goverment CDS (Credit Default Swaps - essentially a contract where one side pays the other if greece defaults by a certain time) would be triggered or affected by a default.

So to answer your question - in addition to the holders of the actual debt described above by other commentators - a lot of people would 'pay for it' while the owners of CDSs would benefit.


---

### Answer by username_8 on 2016-03-29. Score: 0

Two additional issues that are not clear in the other answers:

A) In theory, it is those that have given credit to a bad borrower that will pay the cost of that mistake. A bank always has a list of loans that it cannot recover, and are losses. In this case, that would be the private banks that originally lent money to Greece. However, the way we have organized our banking systems, a big hit to a bank leads to a financial crisis unless the bank is rescued. In this case, that means that although it seems that a lot of the burden would fall on private investors/ banks, in the end its is often the public sector and therefore the regular citizens of a country that end up paying for the default.

B) In these cases, the issue of 'debt seniority' is important. Often the IMF will only lend if its debt is senior to all the others. This means that in many cases not all the debt is equally risky and a default would hit private lenders before it hits sovereign lenders and then finally 'IFI' lenders (IMF, WB,etc).

C) A potential part of the solution is the bail-in as in Cyprus, in which large bank deposit accounts were reduced with a 'levy' of around 40% on any money above a 100,000 level...


---

