As Greece shuts its banks and imposes capital controls, stress measures in financial markets show the threat of contagion is limited.
While Greek bank bonds tumbled and a credit-risk benchmark in Europe jumped, indicators of banking stress across the continent and in the U.S. suggest relative calm as concern mounts that Greece will exit the euro. The U.S. two-year interest-rate swap spread, a key measure of risk for banks, rose Monday only to a high matched last week.
The relatively muted effect on markets reflects investors' confidence in firewalls erected to contain the fallout of a potential Greek default during months of debt talks. The European Central Bank (ECB) has already been buying bonds under its quantitative-easing program and has additional crisis tools put in place in the past few years.
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