World Business
Euro zone backs Greek aid, govts try to calm markets
(Agencies)
Updated: 2010-05-08 16:00
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Market volatility
Philadelphia Federal Reserve Bank President Charles Plosser said the crisis did not pose a huge risk to the United States, but this did not mean it could not evolve into one.
"The challenges that Greece poses are at the moment primarily for Europe more broadly ... that can spill over to us in the form of a weaker market for our exports," he said.
"The more direct danger is of course concerns about the financial markets and how they will behave."
Pamela Cox, the World Bank's vice president for Latin America, said the region not was in danger of direct fallout from Greece and the euro zone's debt crisis. "But if there is a global contagion, Latin America will be affected," she said.
Dismissing suggestions the euro zone was about to break up, European Central Bank Governing Council member Guy Quaden told a Belgian newspaper: "Portugal, Spain, Ireland or Italy are not in the same situation as Greece."
Euribor bank-to-bank lending rates had earlier reached their highest level in almost four months and the euro traded close to a one-year trough.
Greece's parliament backed an austerity plan on Thursday but selling accelerated across markets after the ECB said it had not considered buying government bonds to ease Greece's debt crisis.
European investment-grade corporate credit default swaps hit their widest levels in more than a year, and there was a rise in the premium that investors demand to buy peripheral euro government bonds rather than those issued by Germany.
Greece's 30 billion euro ($40 billion) austerity bill imposes years of hard measures in return for the joint rescue by the EU and IMF, and has led to violent protests in Athens.
