A new Greek unity government headed by the European Central Bank's ex-deputy chief Lucas Papademos was sworn in today.
The ceremony was delayed by two hours until 2pm Irish time.
Finance Minister Evangelos Venizelos has been re-appointed to the post in the new coalition.
EU leaders are hoping that a measure of calm will return to the volatile bond markets amid ongoing political developments in Greece and in Italy.
Mr Papademos was brought in to pull Greece back from the brink, after an historic power-sharing deal between the country's main rival parties.
The 64-year-old must convince Greece's increasingly impatient European and IMF creditors that tough reforms will be completed as promised by the previous short-lived socialist administration.
"The Greek economy is facing huge problems despite the enormous efforts made ... Greece is at a crucial crossroads," the incoming prime minister said after his appointment.
"The course will not be easy", he added.
Mr Papademos heads a transition government whose main task will be to ratify an EU bailout deal crucial to the country's economic survival.
His first job is to persuade the European Union and International Monetary Fund to disburse an €8bn slice of aid from a 2010 bailout deal that is needed by 15 December before state coffers run dry.
Then he must force through painful austerity measures exacted as the price for a second EU bailout package, which gives Athens €100bn in loans, the same amount in debt reduction and a further €30bn in guarantees.
The new government is also slated to hold early elections as soon as the EU deal is ratified by parliament.
Mr Papademos' appointment took four days of talks between the top two parties - the outgoing ruling socialists and the main opposition conservatives - after prime minister George Papandreou on Sunday pledged to step down.
Former head of state Costis Stefanopoulos described the process to appoint Mr Papademos as "ridiculous", while leading newspapers said Greece had been "humiliated" in the eyes of fellow Europeans, particularly as Mr Papademos had been a front-running candidate since Monday.
"This is something unprecedented in our country, so it had to be done in a solid procedure," outgoing deputy government spokesman Angelos Tolkas told state television channel NET.
Mr Papandreou's position as prime minister had become untenable after he shocked his European partners with a call for a referendum on the bailout deal on 31 October.
He was admonished by fellow EU leaders at the G20 summit and returned home to a party revolt.
There was also simmering anger towards two years of austerity policies - which Mr Papandreou's successor is bound to continue.
The new government was set up with support from the socialist PASOK party, the New Democracy conservatives and the smaller nationalist LAOS party, who together account for 254 deputies in the 300-seat parliament.
Meanwhile, Italy has also moved closer to a national unity government.
There is now widespread expectation that former European Commissioner Mario Monti will replace Italian Prime Minister Silvio Berlusconi within days.
However, while Italy's rate of borrowing for ten-year debt fell back yesterday below the critical 7% threshold, the interest rate remains worryingly close to unsustainable levels.
Elsewhere, new concerns have emerged over the AAA credit rating of France, after the interest rate on its bonds also began to spike.
The EU has slashed growth forecasts for next year, and while the French government has already announced multi-billion euro cuts to balance the books and reassure investors, concern is rising that it too could get dragged into the eurozone crisis.
