From Wall Street to Brussels, the people with a stake in Greece's financial future are making plans for its exit from the euro zone. As it stands, the debt-plagued nation has a narrow 46-hour window starting Friday when global markets are mostly closed and it could conceivably pull off a departure from the single currency, Bloomberg reports. It would be an incredible effort, requiring Greek leaders to "calm civil unrest" while overseeing a potential sovereign default, but European politicians, bureaucrats and investors around the world are preparing for the uncoupling.
Investors. Money talks, and this afternoon, it's speaking loud and clear. Reuters reports that investors fearful of a Greek departure from the currency zone are stashing their money in safer investments. "U.S. treasury prices rose on Wednesday as concerns over repercussions from a possible Greek exit from the euro zone increased demand for safe haven U.S. debt.," writes Karen Brettell. The 10-year note yield hit its lowest in at least 60 years. Rick Klingman, a treasuries trader at BNP Paribas said investors are buying up treasury bonds because Eurozone officials have run out of options at their summit in Brussels. "There's no real solutions or real plans coming out of the summit so there's more flight to quality," he said.
Euro zone bureaucrats. Reuters scoops that each euro zone country is beginning to draw up contingency plans on a plan circulated by the European Working Group. "As well as confirmation from three euro zone officials, Reuters has seen a memo drawn up by one member state detailing some of the elements that euro zone countries should consider," write Jan Strupczewski and Claire Davenport. The EWG consists of deputy finance ministers and senior treasury officials who coordinate Europe's finance ministers and deal with the continent's temporary bailout fund. "The EWG agreed that each euro zone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro," said Reuters' sources.
Germany. Directly addressing the prospect of a Greek exit, Germany's Bundesbank said today that a Greek exit would be have huge but manageable consequences. "The challenges this would create for the euro area and for Germany would be considerable but manageable given prudent crisis management," the bank said. Paving the way for its exit, Germany stood practically alone in rejecting a proposal to offer eurobonds, which would allow countries to raise money at lower prices. Reflecting on the decision, The Wall Street Journal's Paul Vigna says Germany has finally paved the way for Greece's exit. "This crisis was ultimately going to resolve itself in one of two ways: the Continent was either going to form a United States of Europe, or the euro experiment was going to fail," he writes. "It appears to be going in the latter direction." Needless to say, it should be an interesting weekend.
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