The Greek central bank is said to be desperately trying to thrash out a plan to tackle a string of lingering bad debts in the aftermath of the Italian budget fallout with the EU.
One method reportedly being discussed is the creation of a bad bank with the purpose of taking on the brunt of the debt.
The bad debts are thought to belong to Greece’s four systematic banks – Piraeus, Alpha, Eurobank and National.
Greek bank shares dropped by a further 6.4 percent yesterday and was down by another 2 percent this morning.
This means shares in The Bank of Greece have plummeted around 60 percent since May, while the Athens bourse has lost a third of its value this year.
Professor Costas Lapavitsas of the University of London (SOAS) told the Daily Telegraph: “Greece is very unstable and will be blown out of the water immediately if anything goes wrong in the global economy or if there is a European recession.
“The Greek banks are walking dead. Credit has been shrinking every single month and they are not providing the normal function of banks in an economy.
“They have been burning up their capital and there isn’t a penny for recapitalisation. When the real music starts this will become obvious.”
Greece has been pulled from the brink of financial disaster with three bailouts over the last decade by the troika of the European Commission, European Central Bank and the International Monetary Fund.
The trio loaned Greece a total of £259 billion (€289 billion) in three successive rescue programmes in 2010, 2012 and 2015.
In what was the biggest bailout in global financial history, Athens only this summer finished completing the emergency loan programme.
Greece has agreed debt relief measures with its eurozone partners.
These extend maturities on some loans and soften the interest rate burden on others.
Athens also has a €24 billion cash buffer, which will help to improve debt sustainability over the medium term.
Last month, Greek Finance Minister Euclid Tsakalotos said volatility in Italian government debt has made it harder for Greece to return to bond markets.
A recent selloff in Italian government debt has pushed up the borrowing costs of other Southern European countries, including Greece.
Mr Tsakalotos said: “It has made it a little harder but on the other hand I think markets are now becoming more sophisticated in understanding that Greece has finished its programme.
“It has done a huge amount of reforms, it’s got a buffer so that its financing needs are under control for at least 2-1/2 years.
“Also it has got a debt deal that means financing its debt is easier than it is in Portugal and Italy.”
Italy’s debt is already the second highest in the eurozone as a share of economic output after Greece, at about 131 percent of GDP.
Rome sparked a war of words with EU chiefs after unveiling plans for a deficit budget of 2.4 percent of GDP – three times the previous administration’s target.
Italian government leaders have so far refused to back down over its expansionary 2019 budget, which EU chiefs claim breaches previous spending agreements.