What was once an "avoid at all costs" scenario is quickly becoming an real possibility, as Eurozone central bankers are starting to openly discuss the idea of "managing an exit" of Greece from the Euro.
The Financial Times explains:
Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout.
The comments by members of the European Central Bank’s governing council indicate that the risk of eurozone fragmentation is being taken increasingly seriously by the region’s policymakers.
They mark a significant shift at the ECB, which has previously argued that European treaties do not allow for an exit and that a break-up would cause incalculable economic damage.
Bloomberg is similarly reporting:
European Union Economic and Monetary Commissioner Olli Rehn said in Tallinn that the region is “certainly more resilient” to a possible Greek exit than it was two years ago, when the bloc would have been “massively underprepared.”
“I still believe that Greece can stay in the euro and find the way to make sure that it respects its commitments,” Rehn said. “It would be much worse for Greece and Greek citizens, especially for the less well-off Greek citizens, if Greece did leave the euro than for Europe as such. Europe also would suffer, but Greece would suffer more.”
Under a story headlined “Akropolis Adieu, Why Greece Must Leave the Euro”, Germany’s Der Spiegel magazine today reported that the EU may provide funding for Greece even after a euro departure.
The news follows reports of increasing instability in the Greek government, as many wonder whether Europe would be able to contain the negative effects of the split, and how average Greeks would fare on their own.
"I would be very careful in speculating that it would be a painless process without complications," the head of Sweden's central bank remarked.