The consequences of Greece quitting the euro zone would be disastrous, according to research that draws on lessons learnt from the financial crisis in Russia in 1998 and in Argentina in 2001, the independent online reports. At the beginning of the year the European Central Bank (ECB) provided a massive three-year liquidity injection that made it possible to avert a Greek banking crisis. The ECB also persuaded European banks to become holders of sovereign debt and there was an agreement between Greece and private creditors regarding a relaxation of repayments. Overall, Europeans are mainly in debt to Europeans, with this inter-dependence conducive to co-operation, at least in theory.With public and private external debt still substantial, Greece withdrawing from the euro zone would result in default on sovereign debt and on debt held by private entities. According to calculations, a 50 percent devaluation coupled with a scenario of a relatively speedy resumption of modest economic growth, public sector debt would peak at 330 percent of gross domestic product in 2014.At this stage there are two options for a withdrawal: it could be co-operative, meaning it can be done with the help of EU institutions and member states. The euro’s convertibility into the new Greek currency would very likely be assured by the ECB. But such a “concerted” withdrawal is not very probable. The euro zone member states have rejected the idea, not only because of the principle of the irreversibility of the integrity of the monetary union, but also because of the risk of contagion. Once Greece is out of the euro, will Portugal, Spain and Italy be tempted to follow suit?The other option, which Coface believes is more likely, is that the Greek government will decide to leave the euro unilaterally. Austerity will then no longer be legitimate, growth will fail to materialise, and the social impact of the programmes will have become intolerable. A withdrawal could trigger a collapse of the euro and an increase in the sovereign spreads of all members. The crucial question remains whether economies like Portugal, Ireland, even Spain will be tempted to exit as well.