Central banks and companies not bracing for a possible Greek euro exit would be making a grave error, Belgium's foreign minister said on Friday, rattling markets already alarmed by Spain's deteriorating finances.
Greek elections are due on June 17 and could hasten the country's departure from the currency club should a government intent on ripping up the country's bailout program result. Polls suggest the outcome is too tight to call.
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Greece accounts for little more than two percent of the euro zone economy but could pose a profound contagion threat if it quit the currency area, throwing the spotlight on Portugal, Spain and even Italy.
"There is no organized discussion at the European level along the lines of: what do we do (if Greece leaves)," Belgium's Didier Reynders told the European American Press Club in Paris. "Now, if central banks and companies are not preparing for the scenario, that would be a grave professional error."
Spain is in plenty of trouble even disregarding any backwash from Greece.
It's important autonomous region, Catalonia, said it needed help from the central government because it was running out of options for refinancing debt this year.
"We don't care how they do it, but we need to make payments at the end of (each) month. Your economy can't recover if you can't pay your bills," Catalan President Artur Mas told reporters.
Spain's trump card was that it had successfully issued will over than half the sovereign debt it needs to in 2012.
But after revealing this week that its highly indebted regions faced 36 billion euros of debt refinancing bills this year, way above the previously stated 8 billion, that advantage may have been wiped out.
On top of public debt, the country is hobbled by a banking sector overwhelmed by bad debts tied to a property market boom that bust and has some way further to fall.
Troubled lender Bankia is set to ask the state for a more than 15 billion euros ($19 billion) bailout, well above the 9 billion euros the government had mentioned.
Spain is nationalizing Bankia, which holds some 10 percent of the country's bank deposits. The government insists the bank is a one-off case but economists say a wider bailout of the sector, either by Madrid or the euro zone, may become necessary.
Markets have been buffeted this way and that by the escalating euro zone crisis in recent weeks and face more uncertainty up to the Greek election date any maybe beyond.
The euro plumbed a fresh 22-month low against the U.S. dollar on the back of the Catalonian warning, stocks went into reverse and Italian and Spanish borrowing costs rose.
Having risen 0.8 percent earlier in the session the FTSEurofirst 300 index of leading European shares was down 0.2 percent by 1400 GMT.
"The Catalonia news was a big deal because it implies that the Spanish government may have to take on more debt and it cannot afford to do so," said Richard Franulovich, senior currency strategist at Westpac Securities in New York.
EU leaders insisted at a summit on Wednesday that they wanted to keep Greece in the euro zone and they have good reason to, given the losses that could be inflicted on them and the European Central Bank should the country default on its debt.
But sources told Reuters the Eurogroup Working Group - experts who work for the bloc's finance ministers - had told member states to begin making contingency plans for the opposite.
"Our first priority is to keep Greece in the euro zone whilst they are respecting the commitments," European Council President Herman Van Rompuy told a news conference during a visit to Ljubljana, Slovenia on Friday.
"Of course we are reflecting on all different kind of scenarios but we never discussed them neither in technical nor in political form," he said. "The contingency plan is not our priority."
French banks, which are among the lenders most exposed to Greece, have stepped up their plans for a euro zone exit, sources familiar with the situation said. They include Credit Agricole, BNP Paribas and Societe Generale.
"Every bank has a task force right now looking at the potential consequences of a return to the drachma," a Paris-based banker said.
Most economists agree the austerity measures foisted on Greece as part of its 130 billion euros bailout will be impossible to deliver since they will drive the country deeper into recession and make debt even harder to cut.
Peter Bofinger, one of the five "wise men" who formally advise the German government on the economy, said Europe should renegotiate the terms of Greece's bailout as they were agreed on overly optimistic assumptions about growth.
"The terms for Greece should be renegotiated," Bofinger told Reuters in an interview. "That's very important for both sides, because if you have an uncontrolled exit of Greece, it could lead to a 'Lehman moment' for Europe."