Greece, Euro | featured news

As the prospect of Greece leaving the euro becomes more real by the day, economists are trying to figure out what would happen next, to the economy and to the markets.

Greek voters are returning to the establishment parties that negotiated its bailout, a poll showed on Thursday, offering potential salvation for European leaders who say a snap Greek election next month will decide whether it must quit the euro.

Political leaders in Greece need to show the resolve to stay in the euro zone, which will require Athens to stick to the terms of its rescue package, International Monetary Fund Managing Director Christine Lagarde said on Thursday.

David Cameron appeared to cast doubt on the future of the euro during prime minister's questions when he said the eurozone "either has to make up or it is looking at a potential breakup".

The head of Greece’s top administrative court, Panayiotis Pikrammenos, was named the nation's caretaker prime minister Wednesday as voters prepare for another election on June 17 that is widely viewed as a referendum on whether Greece stays in or leaves the Eurozone.

Greece's president spoke of "fear that could develop into panic" at the country's banks in the weeks before fresh elections that could precipitate Athens exit from the euro zone.

Some two decades ago, when Europe’s leaders worked out the details of their grand vision to connect the European Union with a single currency, virtually every economist on this side of the Atlantic — and most of those on the other — figured out that the euro would be fatally flawed.

Talks to broker a coalition government lead to insults and accusations. Europe is watching nervously, fearing the political chaos could threaten the euro.

Investors nervous about the changing political winds in Europe initially drove down the euro and sent stock markets falling across the region Monday morning, though markets were bouncing back later in the day following renewed signs of strength in the German economy.

European leaders are holding an emergency summit on Greece's debt crisis, trying to prevent a meltdown for the euro and a global economic slump.