Prepare for contingency if Greece decides to quit currency

The leaders of European Union are being advised by senior officials to prepare contingency plans in case Greece decides to quit the single currency.

They urged the country to stay the course on austerity and complete the reforms demanded under its bailout programme.

After nearly six hours of serious talks held during an informal dinner, leaders said they were committed to Greece remaining in the Eurozone. But it had to stick to its side of the bargain too, a commitment that will mean a heavy cost for Greeks.

"We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to," German Chancellor Angela Merkel said.

Three officials said the instruction to have plans in place for a Greek exit was agreed on Monday during a telecon of the “Eurogroup Working Group”.

The Greek Finance Ministry denied, but Belgian Finance Minister Steven Vanackere, said; "All the contingency plans (for Greece) come back to the same thing, to be responsible as a government is to foresee even what you hope to avoid."

There are a lot of different strains and the real concern is that if Greece were to leave, there would be contingent to other countries.

Spain is particularly in the limelight at the moment because of its wide deficit and its ongoing problems in the banking sector. But there are other countries that would also be caught up in any post exit environment - Italy, Ireland, Portugal.

There are lot more talk about the Greek exit

It is perhaps not too much of a surprise if it happens. Having said that, markets are not fully positioned for this event.

Of course we don't know, we need to wait and see what happens with the elections. The elections in Greece will take place on 17 June. But still there is a lot of uncertainty, there is every reason for Greece to remain in the euro.