Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, euro zone sources said on Wednesday.
Officials reached the consensus on Monday afternoon during an hour-long teleconference of the Eurogroup Working Group (EWG).
As well as confirmation from three euro zone officials, Reuters has seen a memo drawn up by one member state detailing some of the elements that euro zone countries should consider.
The EWG consists of officials who prepare meetings of finance ministers and also form the board of the temporary bailout fund, the European Financial Stability Facility (EFSF). It consists mostly of deputy finance ministers and senior treasury officials.
“The EWG agreed that each euro zone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro,” said one euro zone official familiar with what was discussed on the call.
“Nothing was prepared so far on the euro zone level for now, for fear of leaks,” the official said.
A second official confirmed the EWG agreement. The situation in Greece, which faces elections on June 17, seems certain to be discussed at an EU summit later on Wednesday.
The Greek finance ministry denied in a statement that there was agreement to prepare contingency plans.
“The Ministry of Finance categorically denies the reports stating that during the teleconference of the Euro Working Group on May 21st 2012, it was agreed that each euro zone country should prepare contingency plans for the potential consequences of a departure of the Hellenic Republic from the single currency area,” the statement said.
But Belgian Finance Minister Steven Vanackere, asked by reporters ahead of the EU summit, said:
“All the contingency plans (for Greece) come back to the same thing: to be responsible as a government is to foresee even what you hope to avoid.”
“We must insist on efforts to avoid an exit scenario but that doesn’t mean we are not preparing for eventualities. I believe many countries have their contingency plans for the things they want to avoid at all cost, like terrorist attacks, and to say that we don’t have a contingency plan would be irresponsible,” Mr. Vanackere said.
The Greek election, the second in two months, is widely seen as a referendum on whether the debt-laden country should stay in the euro zone and undertake painful reforms and austerity, or leave and try its luck with its own currency.
Polls suggest the vote could go either way.
The document seen by Reuters detailed the potential costs to individual member states of a Greek exit and said that if it came about, an “amiable divorce” should be sought.
It also said that if Greece were to decide to leave, the EU/IMF could give it up to €50-billion to ease its path.
The document said Athens would bear huge costs if it decided to abandon the currency, while other euro zone countries would have more limited costs.
But the paper said that the risk of knock-on effects that could hit other euro zone countries under market scrutiny now was underestimated.
“The markets will definitively distrust the euro,” the paper said.
Germany’s Bundesbank said on Wednesday a Greek exit from the euro would be “manageable”.
The German central bank also said euro zone states should have a say on further payments of aid to Greece under its €130-billion bailout program.
So far the euro zone has disbursed €38.4-billion from the second bailout program to Greece. The emergency lending is linked to conditions of tough reforms, which most Greeks oppose.
The euro zone also lent Greece €34.5-billion to help Athens complete a debt restructuring in which private investors had to write off almost three quarters of what Greece owed them.
“Greece is threatening not to implement the reform and consolidation measures that were agreed in return for the large-scale aid programs,” the Bundesbank said.
“This jeopardizes the continued provision of assistance. Greece would have to bear the consequences of such a scenario.”
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