Greek Default and the Euro Zone Crisis

Standard and Poors downgraded Greece today to Selective Default status. The International Swaps and Derivatives Association is now debating whether this means that credit default swaps are due to be paid as a result. It will decide by the 29th. If it argues that they are due to be paid, then a great many contracts will have to paid out, some banks won't be able to fulfil their obligations.

This is an excellent time for national governments in the EU to consider whether the core business of retail banking ought to be connected to the world of financial derivatives, investment banking and international finance. It still is, and perhaps should not be.