Finance ministers from the EU have agreed on a massive defence package worth at least euro720 billion to stabilize European countries, in a deal with the International Monetary Fund.
Elena Salgado, Spain's finance minister, said the EU Commission would contribute euro60 billion ($75 billion). The 16 nations in the euro-zone would offer euro440 ($570 billion) in bilateral loans, and the IMF would contribute up to euro220 billion.
"We are facing such exceptional circumstances today and the mechanism and the mechanism will stay in place as long as needed to safeguard financial stability," the ministers said in a statement.
The agreement was announced late Sunday, just before the Asian stock markets opened.
To help matters further, the Bank of Canada will re-establish a currency swap with the U.S. Federal Reserve and other foreign banks.
In a statement posted to Canada's Department of Finance website late Sunday, the G7 finance ministers said they are "committed to redeploy the bilateral swap arrangements between the Federal Reserve, European Central Bank, Bank of England, the Bank of Canada, and the Swiss National Bank."
Meanwhile, the board of the IMF voted Sunday to approve a $40-billion loan to Greece over the next three years -- its share of a $140-billion rescue package.
Earlier in the day, the euro-zone leaders gave final approval for a $100-billion rescue package of loans to Greece over the same time period, to keep the country's economy from imploding.
Financial markets have continued to sell off the euro and Greek bonds even as EU leaders have insisted for days that the Greek financial implosion is a unique combination of bad management, free spending and statistical cheating that doesn't apply to other euro-zone nations.
Many economists think Greece will eventually default anyway, which could deal a sharp blow to the euro and lead to sharply higher borrowing costs for other indebted countries in Europe.
Default could lead to panic, intimidating consumers from spending and making banks fearful to lend money to businesses and consumers.
Some economists are predicting that the Greek financial crisis could drag the rest of Europe, the United States and possibly the entire global economy back into recession.
Ian Lee, of Carleton University's Sprott School of Business, told CTV's Question Period Sunday that crushing government deficits and debt loads in Greece and other nations are threatening to quash the still-fragile recovery.
"We are going to be running into serious problems," he said. "I think we are risking going back into recession because there's no serious effort to confront these problems in the United States or in Europe."
Lee said that European governments have failed miserably in their attempts to manage Greece's financial meltdown and that failure could have dire consequences for the rest of the world economy.
"The European leaders are just delusional, because they are denying the fundamental problem … (that) these debts are completely unsustainable," he said. "The markets realize that Greece is insolvent, but the leadership of Europe have been running behind on this issue."
Economist Jeff Rubin said the Greek and other European governments aren't the only ones facing possible bankruptcy.
"The problem is not about Portugal, Italy, Greece or Spain. The problem is we're all pigs (at the trough) now, and in particular the United States," he said. "That poses a much greater systemic risk to capital markets than Greek debt.
"The U.S. has a deficit that is in double-digit territory in relationship to its GDP: usually that would bring an IMF swat team to the table."
He said Greece and possibly other struggling EU nations will be forced to leave the euro, the European common currency, and their economic problems will have far-reaching consequences.
"People are looking at the problems in Greece; looking at the problems in Portugal and Spain and extrapolating that and saying those problems are coming to an economy close to you."
With files from The Associated Press
