The Guardian reports that the euro "has fallen sharply," after the German news magazine Der Spiegel reported that a debt-burdened Athens was considering "abandoning the euro and reintroducing its own currency."
Greece very quickly denied the report. The Guardian adds:
The Greek deputy finance minister, Filippos Sachinidis, told Reuters: "The report about Greece leaving the eurozone is untrue. Such reports undermine Greece and the euro and serve market speculation games."
The euro has had its worst week since January, and has fallen 1% to below $1.4400 after a report on the Der Spiegel website that a secret crisis meeting is being held in Luxembourg on Friday evening to discuss the situation of the heavily indebted Greek nation.
Greece was the first of the euro-zone nations to need a bailout and this news is just the latest in a long episode that started with rumors that Greece's debt would need to be restructured. It's complicated stuff, with dramatic reactions from the market that the Financial Times quite aptly calls, "an enigma inside a riddle, wrapped in a mystery, inside an enigma."
That the market would react violently to rumors that Greece is bailing on the Euro is pretty easy to understand. As an analyst told Bloomberg, it's an "existential concern." And for Greece it would mean more control over its monetary policy.
This Der Spiegel piece from earlier this year does as good a job as any, explaining how Greece's debt problems affect the European Union. In essence, what lead Greece to need a bailout in the first place — too much debt, bad credit, and an inability to borrow at reasonable rates — could lead it in the same direction once again. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.