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Berlin is not ruling out a 'Grexident'

While the official line from Berlin is that Greece will remain part of the euro, there is a growi...
Newstalk
Newstalk

15.03 13 Mar 2015


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Berlin is not ruling out a &am...

Berlin is not ruling out a 'Grexident'

Newstalk
Newstalk

15.03 13 Mar 2015


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While the official line from Berlin is that Greece will remain part of the euro, there is a growing theory that the monetary bloc could be sliding towards a 'Grexident' - an accidental Greek exit from the euro zone.

When pushed by the Austrian media, German finance minister Wolfgang Schaeuble admitted that he could not rule out the possibility that the Greeks will leave the currency, saying "since we do not know exactly what the authorities in Greece will do, we can not rule it out."

This comment came after the Financial Times published a story quoting sources inside the German finance ministry that said that Greece could be "amputated" from the euro like a "gangrenous limb."

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The FT piece reads: "Hawkish German officials accept what they call "the amputated leg theory," which says Greece should be cut off like a gangrenous limb to spare the rest of the euro zone body. The doves counter with the "domino-effect theory" - the idea that if Greece crashes out of the euro zone, other vulnerable economies could follow, and destroy the currency union."

Difficult negotiations between Greece and its euro partners have hurt the German government domestically.

Angela Merkel suffered a significant backbench bench rebellion as 29 politicians from her Christian Democratic Union and its sister party, the Christian Social Union voted against the motion to extend Greece's bailout when it passed through the Bundestag.

A new poll from German TV channel ZDF has found that 52 percent of Germans would favour a Greek exit from the euro - up from 41 percent in February.


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