World stock markets and the value of the euro plunged Monday as investors worried that Greece would not be able to pay back its bailout loans.

European shares hit their lowest point in more than two years, with exchanges in London, Paris and Frankfurt all falling sharply. German Economy Minister Philipp Roesler said Europe could no longer dismiss the possibility of an “orderly default” by Greece, although other German officials said they do not want Athens to leave the 17-nation bloc that uses the common euro currency.

Analysts view the possible Greek default as a watershed moment for the stability of the euro, which has been falling in value against both the Japanese yen and the U.S. dollar.

The fear is that if Greece defaults, it could lead to further problems in containing the continent’s debt contagion, especially in Italy and Spain, the eurozone’s third and fourth largest economies. A default could also pose significant problems for French banks holding large amounts of Greek debt.

Markets in Asia were down sharply, with the key Hong Kong index off more than four percent. European exchanges opened lower and kept on falling.

Bank stocks have been particularly hard hit by the looming possibility of a Greek default, as investors fear rating agencies could downgrade bank credit ratings because of loans to Greece. German government officials in particular have been meeting to draft plans to shore up the German banking sector in the event of a Greek collapse.

Signs that European policymakers are divided on how to deal with Greece’s financial woes sent the euro to seven-month lows against the dollar Monday.

Oil prices fell by more than $2 a barrel because of concerns about Europe’s debt crisis and slowing global economic growth.