Definition of Grexit

What does the term "Grexit" mean? What does the term "Grexit" refer to?

The term "Grexit" refers to the potential exit of Greece from the European Union. "Grexit" is formed by combining the words "Greek" and "Exit" and was coined by Citigroup's Chief Analysts, Willem H. Buiter and Ebrahim Rahbari, in February of 2012.

Greece has been in the throes of a debt crisis for a number of years now. The country has received a number of bailout loans from the "Troika" (Eurozone countries, European Central Bank and the International Monetary Fund) in order to prevent a sovereign default and cover Greece's basic financial needs. A powerful recession in Greece, however, has resulted in the country needing multiple additional bailouts in order to survive. These bailout loans were contingent on Greece implementing some harsh austerity measures and other reforms, which have obviously not gone over too well in the country.

Many people in Greece feel that the "Troika", led, in large part, by Germany, has looked to impose unnecessarily harsh conditions on their country in order to embarrass and humiliate them. Those who support the "Troika", however, argue that harsh austerity measures and other reforms are necessary in order to restore Greece to some semblance of solid financial footing, and that Greece's past irresponsible ways (overspending, lax tax collection, etc) have now come home to roost.

Many argue that a "Grexit" is a relatively sure thing and that continued bailout loans will just prolong the inevitable, and that a "Grexit", coupled with an orderly default, would be the best thing for Greece. Others argue that keeping Greece in the European Union is crucial to the long-term viability of the Eurozone.

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