Eurozone prepares plans on 'Grexit'
Source: Agencies |
May 24, 2012, Thursday
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Print Edition
Print Edition
EUROZONE officials have told members of the currency area to prepare contingency plans in case Greece decides to quit the bloc, an eventuality which Germany's central bank said would be "manageable".
Three officials yesterday said the instruction was agreed on Monday by a teleconference of the Eurogroup Working Group - experts who work on behalf of the bloc's finance ministers.
"The EWG agreed that each eurozone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro," said one eurozone official familiar with what was discussed.
Although minds will be focused by the prospect of Greece exiting the currency area, which has earned the monicker "Grexit" and is something policymakers say they want to avoid, disagreements over a plan for mutual bond issuance and other measures to alleviate two years of debt turmoil have already been laid bare.
In its monthly report, Germany's Bundesbank said the situation in Greece was "extremely worrying" and it was jeopardizing any further financial aid by threatening not to implement reforms agreed as part of its two bailouts.
It said a euro exit would pose "considerable but manageable" challenges for its European partners, raising pressure on Athens to keep its painful economic reforms on track.
Greek officials have said that without outside funds, the country will run out of money within two months.
Despite fears Greeks could open the exit door if they vote for anti-bailout parties at a June 17 election, Spain, where the economy is in recession and the banking system is in need of restructuring, is at the frontline of the crisis, with concerns growing that it too could need bailing out.
Three officials yesterday said the instruction was agreed on Monday by a teleconference of the Eurogroup Working Group - experts who work on behalf of the bloc's finance ministers.
"The EWG agreed that each eurozone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro," said one eurozone official familiar with what was discussed.
Although minds will be focused by the prospect of Greece exiting the currency area, which has earned the monicker "Grexit" and is something policymakers say they want to avoid, disagreements over a plan for mutual bond issuance and other measures to alleviate two years of debt turmoil have already been laid bare.
In its monthly report, Germany's Bundesbank said the situation in Greece was "extremely worrying" and it was jeopardizing any further financial aid by threatening not to implement reforms agreed as part of its two bailouts.
It said a euro exit would pose "considerable but manageable" challenges for its European partners, raising pressure on Athens to keep its painful economic reforms on track.
Greek officials have said that without outside funds, the country will run out of money within two months.
Despite fears Greeks could open the exit door if they vote for anti-bailout parties at a June 17 election, Spain, where the economy is in recession and the banking system is in need of restructuring, is at the frontline of the crisis, with concerns growing that it too could need bailing out.
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