26 September 2011
There are widespread reports that leading economies are considering allowing Greece to fail to pay their international debts. It comes ahead of an important meeting between the boss of the International Monetary Fund and the finance minister of Greece.
Click to hear the report:
At meetings here in Washington, the group of twenty leading nations have been working on plans to deal with the potential damage from a Greek default.
A lot of their efforts have been focused on the banking system. If Greece were allowed to go bust, the bonds that banks hold would become worthless.
German and French banks are most at risk. So there's been lots of talk here in Washington on how to inject more capital to shore them up.
The other big worry is that if Greece defaulted, the financial markets would start turning on other countries. If Italy or Spain were to come under pressure, those here say there isn't enough cash available to help them.
That's why finance ministers are working on building a firewall around Greece to stop the situation from getting that far.
Michelle Fleury, BBC News
Click to hear the vocabulary:
failure to pay back debts
- to go bust
to go bankrupt, to have no money to pay debts
certificates of debt issued by a government or corporation
of no value
- at risk
exposed to the possibility of losing money
- to inject
to introduce, to put into
- to shore them up
to support them
- turning on
attacking or criticizing suddenly and unexpectedly
- to come under pressure
to be affected by the crisis
- a firewall
a barrier to prevent the spread