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Talk about Greece leaving the Euro has been reignited by the recent election of Syrzia, with some again talking about how it is practically inevitable.

Why are these people viewing a Greek default as likely triggering an exit from the Euro? Couldn't Greece simply default on its debt and continue to use the Euro? Would this trigger the ECB to freeze the accounts of Greek banks (and if so, why?).

I understand why moving to a local currency, which can be devalued, might make sense for a country that needs economic stimulation. But I don't understand the direct cause-and-effect from a sovereign default to an exit from the Euro.

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As far as I recall, you're dead on: they don't have to. The contracts don't allow for "some countries kicking others out of the Euro Zone", they never envisioned this scenario when writing them.

On the other side, Greece can, and should, leave on its own. Sharing the currency is hurting them economically, the only reason they're not is that the continuous inflow of loans is preferred over leaving the zone. But if Greece really defaults, I don't think there will be any more lending in the short run. And then really there is no reason for Greece to stay.

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