A special working group, led by deputy finance minister Thomas Steffen, is working on scenarios in the case that Greece is forced to withdraw from the 17-nation bloc, the Financial Times Deutschland reported on Friday.
Colleagues are making calculations about the financial consequences [of an exit] and are considering how a domino effect on other euro member states might be prevented," it quoted a finance industry source as saying.
The ten-member working group, which is made up of officials from various finance ministry departments, wanted to be fully prepared for a possible "negative scenario," the source added.
Last week, German finance minister Wolfgang Schaeuble said it would be “stupid” not to make contingency plans in case Europe's rescue efforts failed, adding that the debt crisis must not become a “bottomless pit” for Germany.
Previous estimates by the IESEG School of Management in Lille have put the direct cost to Germany of a Greek exit at almost €90bn. If contagion were to spread to countries such as Spain and Portugal, the bill could be much higher.
Mrs Merkel is expected to urge Greek prime minister Antonis Samaras to stick with tough reforms aimed at putting the country's public finances back on a sustainable path when the two leaders meet in Berlin this afternoon.
Following a meeting with French president Francois Hollande on Thursday, the German Chancellor said: "It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is.
"I will encourage Greece to pursue the path of reform that demands a lot from the people."
Earlier this week, Mr Samaras told German daily Bild that Greece need "room to breathe" on its austerity targets, as he warned that a Greek exit from the eurozone could end democracy in the country.
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