August 25, 2012

German finance ministry studying "Grexit" costs: paper

BERLIN (Reuters) - A working group led by Germany's deputy finance minister is studying the possible economic impact of a Greek exit from the euro zone, a newspaper reported on Friday, as Chancellor Angela Merkel prepared for talks with Greece's prime minister.


Merkel says she wants Greece to stay in the common currency despite increased German impatience with the repeated failure of Athens to meet reform targets under its two multi-billion euro bailout packages.

The Financial Times Deutschland newspaper, citing finance ministry sources, said the decision to set up the working group showed that Merkel and Finance Minister Wolfgang Schaeuble wanted to be fully prepared for a possible "negative scenario".

"Colleagues are making calculations about the financial consequences (of a Greek exit) and are considering how a domino effect on other euro member states might be prevented," the daily quoted the ministry sources as saying.

The group, made up of around 10 officials from various departments of the finance ministry, is led by Deputy Finance Minister Thomas Steffen, a member of Merkel's centre-right Christian Democrats (CDU), the paper said.

Asked about the working group, a spokesman for Schaeuble told the newspaper the government had to be prepared for all scenarios, including "improbable ones".

Merkel will urge Greek Prime Minister Antonis Samaras in their talks on Friday in Berlin to stick with tough reforms aimed at putting the country's public finances back onto a sustainable basis.

Samaras says his government is committed to keeping Greece in the euro zone but wants some leeway in implementing more tough austerity measures in a country suffering its fifth year of recession.

yahoo.com

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