Greece's debt-to-GDP ratio is reaching unsustainable levels. But why should the debt load of such a small country cause such outsized tremors in global financial markets?
Greek debt may be relatively small, but a sufficient amount is held by a few major banks in Europe to cause disruptions to the credit system. This effect is magnified because other banks from around the world are exposed to these European banks, making the problem global.
This timely report from the Milken Institute examines the exposure of banks around the world to Greek debt, and calls for swift and decisive action by policymakers to head off a global banking crisis.