How the Euro Was Saved

‘Kill the country in hours’

But Mr Papademos and EU officials began to worry about a second “accidental” route to Grexit after the May election results: a bank run.

If panicked withdrawals began, it could lead to the same place as a “hard default”. Greek banks would literally run out of cash, and the ECB would be unable to fund them because they would be insolvent. “Rules would clearly prohibit providing liquidity without adequate collateral, so that means you kill the country within hours,” said an ECB official involved in the deliberations. To restart the banks, a new currency would be needed.

As Greece’s political parties fought over whether they could form a government, Mr Papademos was receiving daily updates from the central bank on totals ...