Former ECB Pres. Trichet: Idea of euro collapse 'is wrong'

Trichet: Greek default would have consequences

Former European Central Bank President Jean-Claude Trichet stood by the euro's stability Monday despite the failure to secure a Greek debt deal thus far.

"This idea that the euro area is about to evaporate or collapse, which is in the air since the very beginning, is wrong," Trichet told CNBC's "Squawk on the Street." After the euro plunged roughly 2 U.S. cents overnight Monday, the currency battled back and even briefly traded in positive territory against the dollar. (Tweet This)

"I trust that the euro as a currency has proved a remarkable resilience in the worst crisis since World War II of the advanced economy ... so from that standpoint, I think the confidence in the euro is not touched at all," he said. "What is likely at this stage, in my opinion, is that most observers do not know and are not pricing in either 'yes' or 'no.'"

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Greece does not look likely to meet its 1.5 billion euro ($1.7 billion) debt repayment to the International Monetary Fund due Tuesday after European partners cut off credit lifelines and Athens announced a referendum on bailout terms.

But as bleak as keeping Greece in the euro zone might look, Trichet said the brunt of that impact will not fall on Europe.

"All taken into account, I would say the main problem is the Greek problem—it's not the problem of the other countries, in my own understanding, both I would say politically and economically and financially."

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With that thought in mind the former ECB president affirmed his belief that the final word over a so-called Grexit fell first to Greek citizens themselves.

"Of course, in any democracy the final say is to the people of that democracy—that's absolutely clear," he said, adding that the entire world is involved in the current issue at hand.

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Trichet's confidence in the euro surpassed his confidence in predicting how the Greek people will vote in their July 5 referendum.

"We really don't know exactly what is the political chemistry now in Athens," he added, explaining that markets are assuming that the crisis "won't touch the euro area as a whole."

—CNBC's Everett Rosenfeld contributed to this report.