Moody’s has warned that peripheral Eurozone countries like Ireland would be particularly vulnerable in the event of a Greek exit from the Euro.

As European leaders try to hammer out a deal, the ratings agency says that a Grexit would have "severe direct consequences" for Greek banks which could result in a deposit freeze, and possibly broader capital controls.

It says that while countries like Ireland have improved their financial positions - there are still legacy issues from the previous crisis which could be exposed by a major shock in the eurozone economy.

Sean Marion, a managing director in Moody's London-based banking team commented on the report:

"Legacy issues from the previous crisis still weigh on their (peripheral euro) countries' ability to return to full financial health, while they are also more susceptible to restricted market access and higher cost of wholesale funding in the event of an adverse shock," as these countries have "less flexibility" on their balance sheets.

This warning come days after Finance Minister Michael Noonan said that he did not believe there would be a contagion effect if Greece leaves the single currency.

Speaking on his way into this morning's cabinet meeting, Taoiseach Enda Kenny said that there is "absolute unanimity" around the negotiating table supporting Greece's membership of the euro, adding that he hopes that a deal will be done before this weekend.