When the possibility of Greece leaving the euro first became apparent, bank analysts coined the action as a “Grexit.”
Then when the country announced a shock bailout referendum for July 5, which led to a resounding “No” from the nation, the word “Greferendum” was born.
Now we have another word to add to our Greek debt crisis lingo — “Grimbo.”
Over the last week, some of the world’s biggest banks have pumped out research notes to decipher what would happen if Greece voted “Yes” or “No” in the referendum.
The overwhelming percentage of people voting “No” — or “OXI” — to the bailout conditions set out by creditors on June 30, means the Syriza-led government will likely default on almost all its remaining debt and run out of money because the European Central Bank will not lend the country anymore cash.
This is tipped to lead to a Grexit. However, banks say that Greece is unlikely to exit the Euro immediately as there is a period of political and economic limbo — dubbed “Grimbo” by Citi.
Citi’s analysts earlier this week, sent out a note saying:
Grexit is not Citi’s base case but the risks have risen. If Grexit were to happen, we expect it to be after an extended period of ‘Grimbo’ (Greece in economic and financial limbo) following a No vote in Sunday’s referendum.
Equally, a Yes vote may also lead to an ongoing ‘Grimbo’ period, albeit less extended. In a negative scenario, a complete nationalisation of banks can’t be ruled out. We expect some form of capital controls to persist for the foreseeable future and it is likely that the Athens bourse does not reopen next week.
It’s not certain whether “Grimbo” will catch on as much as “Grexit” but they did try.