Geithner describes alarm at Schaeuble plan for Greek euro exit in new book

A Greek eurozone exit was in the cards in 2012 according to former US Treasury Timothy F. Geithner.

In a new book, “Stress Test: Reflections on Financial Crises,” published on Monday, the former US Treasury chief recalls a meeting with German Finance Minister Wolfgang Schaeuble on the North Sea island of Sylt in July 2012, during which the latter discussed the case in favor of a Grexit.

According to the book, Schaueble argued that several eurozone countries were in favor of Greece leaving the single currency and that this would allow Germany and others to create a firewall around the remaining members.

“I found his strategy frightening,” writes Geithner, adding that he subsequently informed US President Barack Obama upon his return to Washington, who in turn was “also deeply worried.”

According to Geithner, Schaueble’s plan was based on the assumption that with Greece out of the picture, Germany would be in a position to provide financial assistance to the rest of the eurozone as the German people would be less reticent about this than they were about bailing out the Greeks.

Following the meeting, Geithner made a stopover in Frankfurt to meet with European Central Bank president Mario Draghi, who assured him that a Greek eurozone exit was not being planned.