Germany hints at Greek eurozone exit

OFFICIALS from German Chancellor Angela Merkel’s coalition sent a tough message to Greece yesterday that it might have to leave the eurozone if it fails to meet conditions for its bailout.

Growing fears of a Greek default sent a hurricane through heavily exposed French banks yesterday and hit the euro as investor confidence in the European currency area’s ability to surmount a sovereign debt crisis ebbed. Shares in Societe Generale, BNP Paribas and Credit Agricole slumped by more than 10% amid expectations of an imminent downgrade by credit ratings agency Moody’s, due largely to their exposure to Greek bonds.

The shock resignation of European Central Bank chief economist Juergen Stark last Friday, and weekend comments by German politicians suggesting Athens may have to default and be “suspended” from the eurozone, drove the euro to a 10-year low against the yen and a seven-month low against the dollar, although it later recovered some ground.