Greece warns of potential exit from the Euro

Posted on 4 Jan 2012 by Tim Brown

The Greek government has warned that unless a new bailout package is confirmed, within the next three months, it will be forced out of the Euro currency.

A spokesman for the new coalition government led by former central bank chief Lucas Papademos, said negotiations with the “troika” of the International Monetary Fund, Brussels and the European Central Bank over the coming weeks would “determine everything”.

Greece was promised a second emergency bailout worth €130bn (£108bn) in October after it became clear that the first rescue package, agreed in May 2010, was not enough to stabilise its debts.

But talks about this second deal, including a writedown for Greece’s private-sector lenders, are still continuing. Kapsis told Greek television: “This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse.”

Papademos’s technocrat government took power after the resignation of George Papandreou, who had sent world financial markets into a tailspin in November by suggesting he could hold a referendum on whether the Greek people were prepared to accept more austerity as the price of staying in the eurozone.