Insolvency by Greece could paralyse the global financial system and spark a worldwide recession, the European Monetary Affairs Commissioner said, comparing Greece to bankrupt Lehman Brothers.

"Little did the decision makers in the United States know in September 2008 where the bankruptcy of the Lehman Brothers investment bank would lead," Olli Rehn said in a column published in Finnish weekly magazine Suomen Kuvalehti.

"The consequence was a paralysis of the global financial system in a way that led to the biggest global recession since the 1930s. The consequences of Greece's insolvency would be similar, if not worse," he said. Eurozone countries and the International Monetary Fund agreed at the weekend to a three-year €110-billion package of loans to help debt-laden Greece avoid insolvency.

Mr Rehn's comments came ahead of a summit where the leaders of the 16 countries that use the single currency are expected to sign off on the multi-billion-euro bailout package, which has failed to calm turbulence on markets fearful that Greece's troubles could spread.

Mr Rehn emphasised the support to Greece "is not a gift, but an interest-bearing loan," and said the package aimed to secure economic stability in Europe and prevent a nosedive in the economy, which is slowly starting to recover after the downturn sparked by Lehman. "The European economies are so strongly linked to each other that no country would be spared from the consequences" of Greece's insolvency, Mr Rehn said, adding this was the reason that the European Commission, its central bank and the IMF were recommending the package to member states.