ATHENS, Greece — Greece is an “integral” part of the euro zone, the leaders of Greece, France and Germany said during an emergency teleconference Wednesday night that aimed to calm markets and temper talk of an imminent default by Greece.
German Chancellor Angela Merkel and French President Nicolas Sarkozy also stressed to Greek Prime Minister George Papandreou “that it is more indispensable than ever to fully implement the decisions adopted July 21” by the euro-zone leaders “to ensure the stability of the euro zone,” the French president’s office said.
Fears that Greece was heading rapidly toward a chaotic default — and the idea that it should potentially leave the euro and return to its own currency — have roiled markets for days, both across the 17-nation euro zone and globally.
Retail and institutional deposits at Greek banks fell 19 percent in the past year.
Meanwhile, European Union financial firms are lending less to one another, and U.S. money-market funds have reduced their investments in German, French and Spanish banks.
The main fear of a Greek bankruptcy is that it could destabilize other financially troubled European countries such as Portugal, Ireland, Spain or Italy. It also would affect banks, many of which are large holders of Greek government bonds. Moody’s on Wednesday downgraded the credit ratings of two French banks, Societe Generale and Credit Agricole.
Merkel and Sarkozy pressed the Greek leader on the “importance they attach to the strict and effective implementation of the Greek economic redressment program,” statements issued in Paris and Berlin said.
Greece’s international creditors have become increasingly frustrated by the slow pace of reforms, with the country falling behind on a number of targets, including a massive privatization drive promised since February that has made few gains to date.
