Stock markets decline with Greek swap fears

Published:  8 Mar at 6 PM

As reported by the BBC, stock markets have dropped sharply with concerns of an impending deadline to secure Greece's financial future in the euro. Investors now have until Thursday to agree to exchange Greek government bonds for debt paying a lower rate, a deal which has helped secure another bailout.

Greece would likely default on its debts without the bailout and debt swap. The Dow Jones index on Wall Street ended down 1.6%, while the French and German markets lost 3% earlier. The Dow's drop was the largest in almost three months.

Greece's six biggest banks have now settled on participating in the swap, an announcement which was expected and was made after the end of share trading. However, Greece still must persuade banks around Europe, which was what led the shares to fall across Europe last Tuesday.

Germany’s Deutsche Bank dropped by 4% while Commerzbank fell 6%. France’s Societe Generale, Credit Agricole and BNP Paribas all went down about 6%. Italian banks including Banca Popolare di Milano and Unicredit were also much lower.

Greece was first bailed out back in 2010 with 109 billion euros from the EU and the IMF. Portugal and the Irish Republic have also received bailouts. The eurozone established a bailout fund in an effort to contain the financial crisis from spreading to bigger economies like Italy, and also settled on a second bailout last month worth 130 billion euros.