Greek exit not fatal for euro zone - ECB's Honohan

Page last updated at 02:20 GMT, Saturday, May 12, 2012 - 07:20 EST

Reuters:

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A Greek exit from the euro zone would damage confidence in the single currency bloc but not necessarily be fatal, Irish central bank chief and European Central Bank policymaker Patrick Honohan said on Saturday.

The prospect of a Greek euro exit has arisen after European countries said Greece cannot get more of the financial aid on which it is dependent if it does not meet the terms of its bailout. But parties backing the bailout programme have no majority in parliament after inconclusive elections last week.

"It (a euro exit) is not imagined in the legislation, in the treaties, but things can happen that are not imagined in the treaties," Honohan told a conference in the Estonian capital.

"Technically, it can be managed. It (a Greek exit) would be a knock to the confidence for the euro area as a whole. So it would add to the complexity of the operation until things settle down again. It is not necessarily fatal, but it is not attractive," he said.

Read the whole story: Reuters