World Bank Group President Robert B. Zoellick has called on Eurozone leaders to get ready with an emergency plan as events in Greece could trigger financial fright in Spain, Italy and across the Eurozone, pushing Europe into a danger zone.
"If Greece leaves the Eurozone, the contagion is impossible to predict, just as Lehman had unexpected consequences," the head of the global lender said in an OPED published in the Financial Times on Friday.
"A Greek exit would trigger a hit to confidence in other sovereign euro assets. Eurozone leaders need to be ready. There will not be time for meetings of Finance Ministers to discuss the outlook and debate the politics of incrementalism. In panicked markets, investors flee to safe assets, sparking other flames," he warned.
He said one could not predict the outcome of the Greek election, nor whether a new Greek government would simply drive a harder bargain for more subsidies, rather than seek to leave the Eurozone. Greece's Eurozone partners are frustrated, although they still seem willing to offer considerable aid to avoid a crisis precipitated by a Greek exit from the euro - if Greece's leaders and public commit to a viable program.
The differences of views on the ECB board raise doubts about its ability to respond fast, fully, and forcefully to a crisis. Moreover, the states that stand behind the ECB would have to decide to permit it to provide further funds to banks with poor collateral, or those that flirt with insolvency. Zoellick urged Eurozone leaders to be prepared - psychologically and through the European Stability Mechanism - to recapitalize banks.
Even massive injections of ECB liquidity may not be enough, but only the guarantees of the "euro-sovereign" will suffice, according to Zoellick. It is far from clear that Eurozone leaders have steeled themselves for this step.
He advised Eurozone leaders to monitor liquidity risks in the corporate sector. And if banks get emergency assistance, bank executives will need to be pressed to keep providing customers with cash.
The seriousness of the emergency steps should encourage Eurozone leaders to take precautions - such as getting ESM capital into banks now and agreeing on a medium-term funding assurance for countries such as Spain. This assurance could come from the ESM or partial deployment of Eurozone bonds in ways that maintain market discipline on state financing.
Zoellick made it clear that his recommendation does not conflict with Germany's call for fiscal discipline and micro-economic reforms. Those steps must be taken. Germany has understandably been unwilling to turn on its fiscal tap unless those reforms are realized. Yet Germany will not achieve its strategic aims of a more integrated and fiscally sound Eurozone unless it supports reforming states and prepares for contagion, he said.
"Good leaders anticipate. They ready themselves to move quickly - and seize the moment to further larger ends," Zoellick said.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.