Moneycontrol
May 23, 2012 11:08 AM IST | Source: CNBC

No Preparations in Greece for leaving Euro: Papademos

Former Greek Prime Minister Lucas Papademos says there are no preparations underway in Greece for possibly exiting the Euro.


Former Greek Prime Minister Lucas Papademos says there are no preparations underway in Greece for possibly exiting the Euro.



In a brief conversation with CNBC, he also said he is not aware of any specific preparations in European institutions or other European countries.


However, he "cannot exclude the possibility" that countries are making preparations due to increased fear of such an event, driven by the country`s inconclusive elections in early May. Papademos still believes greece leaving the euro is an event "unlikely to materialize," and also called it an "unwanted scenario."


The euro fell sharply in late US trading and the stocks dropped sharply from their highs when some brief headlines crossed the wires, leading to confusion about whether Greece was making contingency plans for a Euro exit.


Papademos spoke to CNBC after the market closed, past 1am Athens time to elaborate on the headlines. Papademos was prime minister until just a few weeks ago, and helped lead the country through the largest debt restructuring in history and helped implement a new bailout agreement for the country.



A former central banker, Papademos told CNBC that "pressure on the banks has eased" in recent days. There were and still are fears in the market that their might be runs on banks if Greek citizens believe a euro exit is coming. But Papademos suggested deposit out-flows had slowed.


Greece is in the process of recapitalizing its banks with the help of 50 billion euros in bailout money from its European partners. Just this evening, the banks reached a "subscription agreement" with the Helleneic Financial Stability Fund which will allow for the first disbursement of 18 billion euros within the week. Papademos believes the recapitalization will help restore confidence in Greek banking system because it will allow Greek banks to fund through ECB once again.

Copyright 2011 cnbc.com

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