German Chancellor Angela Merkel reportedly believes that the euro area could cope with a potential Greek departure from the euro area. German newspaper Der Spiegel reported that Ms. Merkel and German Finance Minister Wolfgang Schauble believe that the euro area have carried out enough reforms since the sovereign debt crisis to withstand a Greek exit from the euro.
Investors are worried of the affects that the January 25 election and fear that it could reignite the crisis, especially if the main opposition anti-austerity Radical Left Coalition (SYRIZA) that is ahead in the polls takes power.
No country has yet to leave the euro area and there is no mechanism in the event of such a departure, however Der Spiegel reports that the German government believes that Greece would have to leave the euro area should SYRIZA win the elections to take place later in the month.
“The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” the weekly news magazine quoted a German government source as saying.