Here's What Happens If Greece Runs Out Of Money

In a report issued Thursday, Bank of America tries to explain what it thinks would happen if Greece misses an IMF payment. The basic premise is simple: if Greece is cash-less in April (and thus, misses an IMF payment), the trouble (default) will come in May.

The report explains that some fear Greece may not be able to pay the €458 million due to the IMF on April 9 and press reports suggest that cash will run out on April 20; when €80 million in interest to the ECB is due, Bank of America argues that "Greece can officially be in default only in May.

"Of course, missing a payment could trigger negative scenarios earlier, if it leads to more deposit losses," it adds.

Having said that, the analysts note that the Greek government has reassured the public it has money to pay the IMF on April 9. However, where the funds will be taken from is not clear; they could come from local governments or other state entities.

Related Link: Report: Greece Will Run Out Of Cash In 7 Days

Time Delay

Missing the IMF payment would not necessarily trigger an immediate default.

It would take one month of non-payment for the for the issue to reach the Executive Board.

Only then, Bank of America believes, "a critical sequence of events could unfold."

"According to the master financial assistance facility agreement between the EFSF and Greece," analysts explain, "the notification of an overdue payment to the IMF would constitute an event of default for the EFSF loans. Such a scenario would risk the EFSF cancelling all or part of its facility, or even declaring the principal amount of the loan to be due immediately."