Europe Must Prepare For Greek Euro Exit

Europe Must Prepare For Greek Euro Exit.

European central bankers have been expressing views on the possibility of Greece leaving the eurozone as its leaders continue to struggle to form a government.  

Greece is to make a final attempt at forming a government on Sunday.  If no new government is formed, a new election will have to be held, and opinion polls suggest Syriza - a leftist, anti-bailout party - will benefit most.  However, Syriza firmly rejects the terms of the most recent EU-IMF bailout, which requires tough austerity measures in return for loans worth 130bn euros.

According to Irish central bank chief Patrick Honohan, a euro exit would be a knock to the confidence for the euro area as a whole, but it is not necessarily fatal.  Greece would suffer more than Europe if it left the euro, according to EU Economic and Monetary Commissioner Olli Rehn.