What would a Greek default look like?

While Greece has denied it is about to default on its debt obligations, there are growing concerns the country will not be able to make a slew of onerous loan repayments to its international creditors—prompting analysts to debate what form a future default could take.

These analysts are unconvinced that further negotiations, due to take place on April 24 between Greece and the Eurogroup of finance ministers, will be fruitful. This could see further aid withheld from Greece, leaving the country struggling to make upcoming repayments and potentially liable to default.

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Robert Kuenzel, director of euro area economic research at Daiwa Capital Markets, warned on Tuesday that Greece’s cash buffers were “increasingly thin” and that a default could be “very nasty.”

“There are different sequences of events that could happen if Greece defaults, all of which might end up in a very nasty scenario – especially, when Greece is no longer able to access ECB (European Central Bank) funding facilities, such as its Emergency Liquidity Assistance (ELA) provision – as solvency is a requirement for ELA,” Kuenzel said.

“Any kind of default would be an extremely messy affair. It could trigger bank runs, a downgrade (of sovereign credit rating) to default status, and could set in motion massive financial instability. The country would have to introduce its own parallel currency, IOUs (I owe yous) or literally something that resembled a bank note.”

Greece has been reliant on international aid from its two bailout programs since 2010, worth a combined 240 billion euros ($254 billion). As the coffers run low, Greece is hoping a last tranche of aid from its bailout program will be released, but the country has not yet instigated the reforms that creditors are demanding as a precondition.

On Monday, Greece firmly refuted a report by the U.K.’s “Financial Times” newspaper on Monday that said Athens was ready to default on its loan repayments to the International Monetary Fund (IMF) if an aid deal was not struck. Instead, Greece said negotiations were proceeding “swiftly” towards a solution.

Bob Parker of Credit Suisse told CNBC that Greece could face a “nightmare scenario” if it did not make the reforms demanded by creditors, leading to no further aid and a default.

“This is when you get a collapse in the banking system and a withdrawal in ECB support – and that would lead to a Greek exit,” the senior advisor in investment, strategy and research said.

“There is a high probability that that could not be managed easily and that would be a messy withdrawal of Greece. If they did get a new drachma (Greece’s former currency) it would probably involve a 50 percent-plus devaluation. That would result not just in a default of the Greek state but also major defaults of Greek companies, Greek individuals that borrowed in euros and the banking system, so I think everyone realises that nightmare scenario has to be avoided.”

Despite the desire in Athens and the euro zone to avoid a default and the upheavals it would bring to both Greece and the single currency union, some market analysts think a default is now as question of “when” not “if.”

“I think default is inevitable,” Michael Hewson, chief markets analyst at CMC Markets, told CNBC Tuesday.

“Whatever happens, even if they agree some tranche of aid for Greece, its economy is not going to achieve the rate of growth it needs to start paying down the debts. There is no prospect of Greece not defaulting, in my view, and if markets don’t realise this they’re living on another planet.”

The so-called troika of international lenders will not “throw good money after bad,” Hewson said, throwing cold water on hopes that Greece can be rescued with more aid, irrespective of whether it make the necessary reforms before its extended bailout program ends in June.

Hewson added that Greece would inevitably exit the euro zone in the event of a default—potentially putting the integrity of the entire region in doubt.