Eurozone Nations Preparing for Greece Exit

Posted May 23rd, 2012 at 12:30 pm (UTC-5)
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Sixteen nations in the euro currency union have started to assess what financial complications might occur if debt-ridden Greece leaves the monetary compact.

Even as they voice the hope that Greece stays in the eurozone, European leaders have in recent days increasingly discussed the possibility that the Athens government may end its euro alliance and resume use of its one-time currency, the drachma.

Analysts fear that a “Grexit,” as some are calling it in Europe, could disrupt international financial markets and cost European banks billions of dollars in losses if Greece defaults on its debts.

Officials disclosed Wednesday that earlier this week key eurozone financial leaders agreed that each of the 16 other euro nations should prepare contingency plans about what the effect would be in their countries should Greece quit the currency union.

Greece's European neighbors and the International Monetary Fund earlier this year approved billions of dollars in the country's second bailout in two years, contingent on Athens adopting sharp austerity measures that have proved highly unpopular for the Greek populace. After a splintered election earlier this month, Greece's fractious political parties were unable to forge a new coalition government, and a new round of voting is set for mid-June.