The euro has fallen by more than 1% against the dollar, following a report that Greece had raised the possibility of leaving the single currency.

German magazine Der Spiegel said eurozone finance ministers were holding a crisis meeting in Luxembourg.

The report has been denied vigorously by eurozone countries, including Greece and Germany.

However, the BBC has learned that ministers from four eurozone countries are indeed meeting in Luxembourg.

The countries - France, Germany, Finland and Netherlands - are said to be discussing EU issues, including the financial situation of Portugal, Ireland and Greece.

"The report about Greece leaving the eurozone is untrue," the Greek deputy finance minister Filippos Sachinidis told Reuters.

"Such reports undermine Greece and the euro and serve market speculation games."

At 18.30 GMT the euro was worth $1.44.

A source told Reuters that some EU ministers were meeting in Luxembourg on Friday to review issues such as Portugal, Greece and European Central Bank leadership, "but nothing more".

German Finance Minister Wolfgang Schaeuble and his deputy Joerg Asmussen were at the meeting, according to Reuters.

But the head of the Eurogroup, Luxembourg Prime Minister Jean-Claude Juncker, has denied that crisis eurozone talks were being staged that could see Greece exit the euro, his spokesman told AFP.

"This information is totally false," his spokesman Guy Schueller told AFP.

"There is no Eurogroup meeting taking place or planned this weekend," Mr Schueller underlined.

Despite dismissals from officials, the story "does seem to be having a market effect," said Ron Leven, a currency strategist at Morgan Stanley in New York.

But he played down the significance of the report. "For (Greece) to leave the euro is very complicated. It's not like they can just wake up tomorrow and say we're not in the euro anymore."

Greece became the twelfth country to join the single currency, when it ditched its own currency, the drachma, in 2002.

Over the past decade the Greek government borrowed heavily - public spending soared and money flowed out of the government's coffers.

However, the revenues the government generated through tax were not enough to counterbalance this, mainly as a result of widespread income tax evasion.

The result was a bulging budget deficit, more than four times the limit under eurozone rules.

In the end, almost twelve months to the day, Greece was forced to accept a multi-billion euro bailout, by the EU and the IMF, to finance its huge deficit.

The 110bn-euro ($136bn; £94bn) loan was designed to prevent Greece from defaulting on its massive debt.

But despite a programme of government spending cuts and other reforms, its economy has struggled to keep its head above water.

In recent weeks, there has been increased speculation that Athens could default and will need to restructure its debts.

Yields on Greek government 10-year bonds have leapt to over 15 percent, a sign that investors are becoming increasingly sceptical that they will be repaid.

I have some old drachma which I'm sure isn't worth much-in fact it wasn't worth much when it was in use. At the time (1989) it was worth about 162 drachmas to the dollar.


Cat

If the report's been denied, then it's bound to be true...

...this basically sums up most people's idealogy of Europe!

Not wishing to be dismissive to the good folk of Greece but...them leaving the single currency won't make it collapse overnight...

Now, if it were someone like Spain...(who, like Ireland and Portugal, have already strenuously denied requiring any kind of bail-out... ::))

I guess the Euro's only fallen because on average people don't believe the rumour - if they thought Greece *were* going to leave, the Euro would be strengthening like crazy

I guess the Euro's only fallen because on average people don't believe the rumour - if they thought Greece *were* going to leave, the Euro would be strengthening like crazy


If one member can leave, so can Portugal, Italy, Greece, and Spain.  (And if we're counting the junior leagues and draft card, Hungary, Ireland, and Turkey to complete the acronym!) 

Greece's departure would be catastrophic for the euro, bullish for the USD and US Treasuries, and catastrophic for equities, precious metals, and other commodities.

"When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world?' You are."
  - Francisco D'Anconia, Money Speech, from Ayn Rand's Atlas Shrugged.

Sadly, her criticism applies as much to post-9/11 America as it does to the Eurozone.  We printed our way out of it in 2009, it remains to be seen whether we can get away with it over the long term.  Although it would have been gratifying to ride a hyperinflationary bull to $100 silver and $5000 gold, it's probably not the way to bet.  She may yet be proven wrong - all the CME had to do this week was raise margins on silver a few times, and they knocked silver from $50 to $35.

In fact, everything that's happened since QE1 and QE2 has indicated that you can print your way out of a debt-deflation spiral without ending up destroyed by hyperinflation.  So far, despite the decline in the USD relative to hard assets, the post-crash trend has been in favor of Bernanke over the gold bugs.  Slowly bring down the USD, reflate stocks and commodities to the point that people start spending again, but not to the point that the economy collapses because nobody can afford $20/gallon for gas, and the system can muddle through.  Still, keep your fingers on the trading triggers... gonna be a fun ride these next few years.

If the report's been denied, then it's bound to be true...

...this basically sums up most people's idealogy of Europe!

Not wishing to be dismissive to the good folk of Greece but...them leaving the single currency won't make it collapse overnight...

Now, if it were someone like Spain...(who, like Ireland and Portugal, have already strenuously denied requiring any kind of bail-out... ::))


Yep.  The more they deny it the more it is likely to be true.  Now mind you I have never been a fan of the whole "United Europe" thing and in the end it is doomed to failure.  But... I cannot see how ditching the Euro would help Greece 

Other, than, of course, a symbolic way for the Greek government to blame those big nasty Euro bankers for Greece's self-inflicted problems.

I would think Greece would come out the worst for it.  Who would invest in their currency?  Wouldn't it contribute to further economic destabilization for their country?
???

I would think Greece would come out the worst for it.  Who would invest in their currency?  Wouldn't it contribute to further economic destabilization for their country? ???


They will.  But that's the gamble.  Die on your feet, or live on your knees?

Iceland called the world's bluff, and after an intitially-catastrophic implosion, recovered mostly OK 6 months later. 

Greece backgrounder from a couple of days ago.

Four opinions on Greece's options.

I don't think Greece will leave the Euro, because the economic dislocation and capital flight would be calamitous over the short term, and no politician likes to take a short-term hit when there's the possibility of kicking the ball down the field for the next guy to deal with.  But suppose Greece defaults - can the rest of the Eurozone reposess in the way that a bank reposesses a homeowner who squats in a foreclosed domicile? (PROTIP: Reposessing a country has traditionally involved columns of tanks, rather than just the county Sheriff and a polite note...)  And if they bail on the Euro, once the dust settles, the surviving Eurobanks will be scrambling handd-over-fist to loan (albeit at usurious rates!) to whatever entity owns the newly-restructured Greece.  Wait, who's holding who hostage again? :)

Well, after two months straight down, we've had a lovely rally in the markets this past two weeks, but it sure as hell took them long enough.