THE GOVERNOR of Austria’s central bank, a member of the ECB’s governing council, has said that the ECB  could allow a temporary Greek default in a bid to try and sort out the struggling country’s finances.

Ewald Nowotny this morning told CNBC there was a “full range of options and definitions” in play, which ranged from “a clear-cut default, selective default, credit event and so on”.

Bloomberg reports that Nowotny later issued a statement clarifying his remarks – saying that he was fully behind Jean-Claude Juncker, who says a default can’t be tolerated – but his marks sent bond markets into a flurry.

Although Greece is not currently borrowing on the open market, its bonds have continued trading second-hand – and today the market-price for a two-year loan to Greece shot up to an astonishing 39 per cent.

Bloomberg’s report added that some finance ministers are urging the ECB to revisit the concept of ‘eurobonds’ – a bond issued by the entire Eurozone at once – as part of a more fundamental solution to the ongoing European crisis.

Proponents of that plan would point to the fact that while Greece would pay 39 per cent for a two-year loan, Germany would pay a mere 1.26 per cent for an identical loan.

Nowotny is among the European bank governors opposed to that idea.

Reuters this afternoon reports that other options on the table at this Thursday’s crucial EU summit – where leaders will attempt to come up with some kind of plan to draw a line under the crisis.

A tax on banking transactions is among the options reportedly up for consideration.

Nowotny may be familiar to Irish people as one of the main voices seeking an increase in Ireland’s corporate tax rate, in exchange for an EU-IMF bailout last November.