Bank chief to take over as premier of Greece

Lucas Papademos took office after four days of power-sharing talks and warned the Greek economy faces huge problems despite austerity measures already taken.

He replaces Socialist Prime Minister George Papandreou, who resigned midway through a four-year term.

Mr Papademos will head an interim government but said no specific date had been set for an early election, which had been expected next February.

The new cabinet is due to be sworn in this afternoon.

Mr Papademos, 64, is not a member of any political party and worked for eight years as vice-president at the European Central Bank (ECB). He was governor of the Bank of Greece when the country joined the euro in 2001.

He said: “I am not a politician but I have dedicated most of my professional life to exercising financial policy both in Greece and in Europe.

“The Greek economy continues to face huge problems despite the great efforts that have been made for fiscal reform.”

He insisted Greece must defend its euro membership and said the country’s problems would be solved more quickly with unity and co-operation.

“The participation of our country in the eurozone is a guarantee for the country’s monetary stability,” he added. “It is a driver of financial prosperity.”

As governor from 1994 to 2002, Mr Papademos presided over a regime of declining interest rates and increasing independence from government interference that was crucial in helping Greece to secure eurozone membership.

He was at the ECB from 2002 until 2010, after which he became an unpaid adviser to Mr Papandreou’s government.

Shares on the Athens Stock Exchange rose by 2.1 per cent even though it was announced unemployment surged to 18.4 per cent in August, up from 12.2 per cent for that month in 2010.