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In Greece, a senior judge is to be put in charge of a caretaker government to run the country until a new General Election on June 17. Questions are growing over whether the country’s finances will last that long. Hundreds of millions of euros have been withdrawn from Greek banks in recent days over fears of a departure from the euro – and return to a devalued drachma. Jonathan Rugman, Channel Four Europe reports.

By Alastair Jamieson, msnbc.com and NBC News

Updated at 12:05 p.m. ET: Political leaders in Athens were due to discuss an emergency government Wednesday to deal with a possible run on banks as it emerged Greeks withdrew almost $900 million in a single day, fearing their country could crash out of the euro currency by the end of the week.

An interim government would take the country through to new elections on June 17, triggered by the collapse on Tuesday of talks to form a coalition between winners of the inconclusive May 6 election.

Greeks are withdrawing euros from banks, apparently afraid of the prospect of rapid devaluation if the country leaves the European single currency and returns to the drachma.

President Karolos Papoulias warned of ?great fear that could develop into a panic,? the minutes of Papoulias’ negotiations with political leaders showed, according to Reuters.

The minutes also?reveal Papoulias was warned by George Provopoulos, head of the country?s central bank, that savers withdrew at least 700 million euros ($894 million) on Monday, Reuters said.

“Withdrawals and outflows by 4:00 p.m. when I called him exceeded 600 million euros and reached 700 million euros,” the president said according to the minutes of the meeting. “He expects total outflows of about 800 million euros.”

The country’s economy is in a meltdown, raising fears that Greece will exit the Euro Zone completely and default on its huge pile of debt. NBC’s Brian Williams reports.

Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming.?A senior executive at a large Greek bank told Reuters: “There is no bank run, no queues or panic. The situation is better than I expected. The amount of deposit withdrawals the president mentioned referred to three days, not one.”?

Still, some were taking no risks. Jenny P., an Athens private medical clinic receptionist originally from Ohio, told msnbc.com she had withdrawn 85 per cent of “what’s left” in her bank account.

?“We could have a new currency in a couple of days and nobody knows for sure what will happen,” she said. “There are no lines to withdraw money, but maybe that’s because many Greeks have precious little left in the bank. Many have been surviving on [$500] 400 euros a month, which has to cover tax, bills, food and medical costs.”

She said she was planning to return to the United States amid the economic turmoil which has left her Greek husband unemployed.?”It is hard to see what the future will be here,” she said.

Greeks have already been withdrawing their savings from banks at a sharp clip – nearly a third of bank deposits were withdrawn between January 2010 and March 2012, reducing total Greek household and business deposits to 165 billion euros.?

A senior bank executive said there had been withdrawals in recent days but there was no sign yet of a panic, as had happened in April 2010 when eight billion euros were withdrawn just before Greece obtained its first foreign bailout.?

?The political vacuum in Greece has hampered the country?s chances of making the budget cuts required by the European bailout deal. Without more austerity measures, the flow of bailout money will dry up, raising the prospect of a euro exit with all its wider ramifications.

Yannis Behrakis / Reuters

Two men withdraw money from an ATM in central Athens May 16, 2012.

The likelihood of a Greek exit from the euro ? dubbed the “Grexit” by commentators ? is now so high that even political leaders committed to avoid it admit preparations are under way.

Asked in an interview whether Greece could leave the euro zone, IMF director Christine Lagarde replied: “We certainly don’t hope so, from the IMF point of view … but we have to be technically prepared for anything”.

Will there be a run on Greek banks?

A Twitter image shared by economics blogger Tyler Durden, posted on UK website Zero Hedge, showed what appeared to lines outside ATMs in Greece, although it was impossible to verify where the picture was taken or if lines were longer than normal.

Reuters reported early Wednesday that there has ?so far been no sign? of lines at banks in Athens, despite the likelihood that an exit from the euro would see a dramatic devaluation in of Greek currency.

CNBC?s John Carney raised the prospect of reduced limits on ATM withdrawals, citing a calculation by London analysts Capital Economics that if every working-age Greek withdrew the maximum permitted ATM amount of 300 euros a day, every single deposit of Greek households would be gone within 61 days.

?So the controls put in place in advance of an exit from the euro would have to include not only limits on moving funds abroad, but limiting withdrawals from ATMs and possibly declaring a bank holiday,? Carney wrote.

In practice, however, any Greeks lucky enough to possess any savings have already taken the precaution of withdrawing them from banks.

?Over the last?two years Greeks withdrew approximately 70 billion?euros from their bank accounts, an amount equivalent to approximately 35 percent of Greek GDP,? Dr Michael Arghyrou, senior economics lecturer at Cardiff Business School in Wales told msnbc.com.

?This is a negative demand shock of enormous proportions and with increased uncertainty this trend will almost certainly accelerate. So yes, we will almost certainly see more deposits withdrawals over the next few days, I just hope is that they will not be so large as to lead to a full-blown bank run.?

How likely is ?Grexit?? Are drachma notes being printed?

A year ago, it was nearly impossible to get officials and political leaders to talk about the possibility of Greece leaving the eurozone. Now it appears to be an open secret.

Yorgos Karahalis / Reuters

A man makes his way past a replica of a one drachma coin outside the Athens Town Hall May 15, 2012.

Ireland’s central bank chief and European Central Bank policymaker, Patrick Honohan, signaled on Sunday that a Greek exit might not be as painful as previously thought.

“Technically, it can be managed,” he told reporters. “It would be a knock to the confidence for the euro area as a whole … It is not necessarily fatal, but it is not attractive.”

The tone from the European Commission, the EU’s executive, has shifted too.

On Monday, spokeswoman Pia Ahrenhilde-Hansen said: ?We wish Greece will remain in the euro and we hope Greece will remain in the euro … but it must respect its commitments. Greece has its future in its own hands and it is really up to Greece to see what the response should be.?

Asked about contingencies, she did not rule them out.

Reuters quoted one European Commission official saying: “Clearly, the future of Greece is in the Eurozone. We are working on that.?The 16 other governments in the Eurozone really are at the end of their patience with Greece. There isn’t room or any willingness to move. The decisions are really in Athens’ hands. But it doesn’t look good.”

However, the official response remains that a Greek exit is not being considered.

In an interview with NBC News on Wednesday, ?Angela Merkel, the German Chancellor, said: “I have the will, the determination, to keep Greece in the Eurozone. I think it will be good for Greece and good for all of us. We want Greece to stay in the Eurozone.”

Some commentators have pointed to a 13 percent rise in the share value of British firm De La Rue, which is the world?s largest currency printer, amid speculation it is best placed to pick up the contract for issuing new versions of the drachma, the Greek currency phased out in 2002.

It has remained tight-lipped on whether it is working for the Greek government, but in the meantime an interim solution has been mooted in which existing euro notes would be converted into drachmas?by being endorsed with an official stamp.

Would a ‘Grexit’ be so bad? If so, what are the alternatives?

Lagarde said a Greek exit from the Eurozone would ?have consequences on growth? consequences on trade and?consequences on financial markets ?. She added: ?You can certainly assume it would be quite messy.”

Global financial institutions have a $536 million exposure to Greek debt, according to the latest figures from the International Monetary Fund, although almost all is borne by France, Germany and other key European economies.

The Institute of International Finance has estimated that the global cost of a Greek exit could hit $1.2 trillion, according to the Daily Telegraph in London. When Argentina defaulted in 2001, foreign debtors lost around 70 percent of their investments, it said.

The Telegraph said a report in Germany?s Wirtschaft Woche magazine forecast that a Grexit would cost the Eurozone governments alone $300 billion, pushing the whole European economy ? which narrowly avoided entering recession on Tuesday by recording exactly zero quarterly growth – into a crisis not seen since the 1930s.

Many are looking at the possibility that Athens issues IOUs to meet salaries and key service bills for a fixed period, much in the way California did during its budget crunch in 2009 when it issued ‘registered warrants’ with a coupon in place of dollar salaries and which banks then accepted for cash.

Much hinges on whether the European Central Bank would allow the Greek central bank to accept such IOUs and there’s little clarity on those hypotheticals.

However, strategists believe any Greek government IOUs would quickly act as a proxy for a new drachma and exchange values against the euro would mostly likely plummet in practice as people rushed to cash out – offering Greeks a glimpse of the shock of devaluation in a euro-ised economy with euro-denominated debts.

“I’m really not sure Greece could survive for very long if external money was cut off,” said Darren Williams, economist at fund manager AllianceBernstein. “But what an experience of IOUs may do rather quickly is bring home to the average Greek citizen just how much more difficult a place it is outside the bailout programme and outside the euro.”

What would happen to the euro?

Besides the huge liabilities, there is the risk that a Greek exit from the euro would set a precedent for the possible exit of other weakened economies including Spain and Portugal.

“Opening up the Pandora’s box of exit means deposit risk across the periphery,? an RBS analyst told Reuters.

Jan Randolph, head of sovereign risk, IHS Global Insight, told the BBC: ?It would be difficult for the [European Central Bank] to keep banks afloat. The Greek banking sector would collapse as well. What happens next is a political question. European nations would probably not accept another Western European country descending into chaos and collapse.?

What is the political future for Greece?

Rampant inflation, civil unrest and even a return to dictatorship could be on the cards, analysts warn.

Arghyrou told msnbc.com: ?There will be no credit for Greek banks or the Greek state. That could mean a shortage of basic commodities, like oil or medicine or even foodstuffs.

The country would end up in a volatile period. There would be institutional weakness. The worst case scenario would be a social and economic breakdown, perhaps even leading to a totalitarian regime.?

Henry Wilkinson, head of analysis at the Risk Advisory Group, said: “We are entering into unknown territory and it remains profoundly unclear what actually will happen. I wouldn’t overstate it, but I think the big concern out of all of this is that in times of great uncertainty and hardship, more extreme parties tend to find greater resonance with their message.”

Roger White, an American private tutor who moved back to the United States from Greece three weeks ago to escape the economic crisis, told msnbc.com: “I see violence on the Greek horizon.?Will the Greeks continue to withdraw their savings?? Yes, for as long as they can.? Then, the government will intervene with limits on withdrawals and other controls.? Then, Greeks will protest in the streets, light banks?afire, smash bank windows and?rip out ATMs.?

“Oddly, I can say that in many ways my Greek experience gave me wonderful?opportunities.? Nonetheless,?my epiphany came?when Greece’s?economic collapse and the?government’s implosion revealed just how reliant on the government we are, and just how?vulnerable to?government mismanagement we?are.”

Reuters contributed to this report.

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