As the prospect of Greece leaving the euro becomes more real by the day, economists are trying to figure out what would happen next, to the economy and to the markets.

Nothing is certain here; Greece may or may not leave, and theres a huge range of potential policy responses.

• DEUTSCHE BANK: Amid all the concern about Greece leaving the euro altogether, Deutsche Bank suggests another path: introducing a parallel currency, which it nicknames the Geuro, to run alongside the remaining common currency. Leaving the euro altogether would cause economic, political and social chaos, the bank says, whereas this would give the authorities the power to stabilize the exchange rate of the Geuroso as to keep the door open to a future return.

• JP MORGAN: Theres now a 50% chance of Greece leaving, up from 20% before the countrys politicians failed to produce a coalition government. Regional unemployment could be higher than anything seen in the past half-century. In terms of policy responses the euro-systems direct exposure appears manageable in the context of large revaluation gains but if losses exceed the readily available buffer, euro-zone sovereigns may be called upon to make immediate capital injections. Among the paths it lays out from here, the chaos scenario for JP Morgan goes as follows: outright victory by the Radical Left or significant influence in a coalition and declaration of a debt moratorium, which the ECB/International Monetary Fund/European Union troika would respond to by ending the financing program and denying Greece access to ECB borrowing. If Greece then introduced the drachma, EUR/USD would probably decline to 1.10 due to widespread capital flight from the region. If instead the government backtracked and re-engaged the troika given that 80% of the electorate favors retaining the euro, the currency would stabilize around 1.20.

• CITIGROUP: There are many scenarios for a Greek exit; almost all of them are likely to be euro negative for an extended period, says the bank that coined the now-ubiquitous term Grexit. If the process is managed, which the U.S. bank deems unlikely, expect a short, sharp selloff in the euro, with a subsequent rally up to $1.45 or higher. If Greece just dumps the austerity program and walks, the risk of contagion rises, and the euro could begin to rally, but so much damage will have been done by then that it would begin its rally from a much lower level and probably not be anywhere close to the current level at the end of the year. If the stronger countries were to break away, some see euro gains ahead, but Citi reckons that this can take a very long time and is probably well beyond an investible horizon. All in all, the outlook for the common currency is not very promisingunless policy makers surprise with decisiveness.  The bank added Monday that it expects Wednesdays unofficial summit to endorse the weekends notion that while euro-zone officials still see Greece as an integral part of the currency block, they continue to demand full compliance with the terms of the second bailout. This neednt lead to a change in the stance of the Greek politicians, however, especially the ones from the anti-bailout parties, the bank adds, and consequently forecasts that investor uncertainty should remain in place after the EU summit and ahead of the Greek elections in June.

• NOMURA: Without pretending to be precise about the effects involved, we think it is fair to say that a large swing in the current-account balance would be forced by a lack of capital inflows and inevitable capital flight, Nomura says, stressing repeatedly that bank holidays may be needed to stem the flight of deposits.

• DANKSE BANK: We are in for a long period of uncertainty but we believe that ultimately a deal will be struck between the EU/IMF and Greece that keeps Greece in the euro and austerity will continue. The alternative is too severe for both the EU and Greece. It notes that there is wide backing among the Greek population for the euro, with 81% in favor in the latest poll, and 54% of the Greek population supports sticking to the EU/IMF program. Danske lays out three scenarios for Greece: positive, negative and very negative. In the positive scenario, the euro-pro and austerity-committed parties ultimately win the votes needed to continue implementing the program. This scenario would trigger a relief rally. In the negative scenario, Syriza becomes the main party following the election. Despite its verbal resistance against the EU/IMF program having been fierce, it is likely to calm down on the other side of the election. In the very negative scenario, the game of chicken between Syriza and the EU/IMF gets out of control and ends with no agreement. The EU/IMF stop the support for Greece and the ECB no longer accepts Greek bonds as collateral. Greece effectively has to undergo the fiscal adjustment overnight. There is a severe run on the Greek banks. Greece defaults on its remaining public debt. The introduction of a new currency would take some time. This scenario would result in initial market chaos. Also, Spain and Italy are likely to come under pressure.

• HSBC:  On contagion, one would have to decide how impacted the market elsewhere in Europe would be by a Greek exit, and also how swift and aggressive the associated policy response from the European Central Bank would be. The latter could include a reopening of the ECBs bond-buying program, additional long-term refinancing operations, or something more ground-breaking. The bank has devised a scale for how damaging a Greek exit would be to the common currency as a whole. Broadly speaking, it reckons that the best outcome for the euro would involve the experience for Greece being as tough as possible. If its too easy, the temptation for others to leave would be greater, and the currency would be seen to be easily divisible.

• BANK OF AMERICA-MERRILL LYNCH: The risk of a Greek euro exit is rising, but so too are the incentives to keep Greece in. If it does happen, expect a short, sharp shock to the euros exchange rate. However, in the short run if the ECB responds decisively we believe risky assets, especially bank stocks and periphery bonds, may be prone to a short squeeze. In the longer run, exporters would have scope to outperform domestically geared stocks for a lengthy period. In a separate note, the bank adds that if Greece exits the euro, Greek oil demand drops one third and in a disorderly euro break-up, demand could contract sharply, with profound implications for oil prices. Brent oil prices could drop as low as $60 per barrel, from the $106 area now.

• RBS: There is already likely to be some form of Plan-B [but] if contagion really kicks off then a thinly veiled form of monetary financing of debts may be on the table. The bank reckons a Greek euro exit risks a total of €400 billion from bailouts, the ECB and Bank of Greece lending. The risk of capital flight is key. We are most worried about deposit risk for the periphery, and we see plenty that can be done to alleviate these risks crucially if there is the political willingness. For instance, allowing banks to access the EFSF/ESM [the European Financial Stability Facility and European Stability Mechanism, the euro zone’s temporary and permanent rescue funds, respectively] directly. We have not thought that this was politically feasible but clearly there is a pain threshold that makes politicians take risks. Alternatively, a euro-wide deposit insurance program would be a good idea, RBS says. For trade ideas, the bank says we think the theme of market deterioration leading to a policy action translates into buying bonds at distressed levels, which looks closer now.

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