Minister for European Affairs Lucinda Creighton has said a Greek exit from the eurozone would place huge pressure on other countries to exit the currency.
Ms Creighton said this is the biggest test we will ever face in our currency union.
Speaking on RTÉ’s Today with Pat Kenny, the minister said: “If Greece were to exit today, tomorrow morning the markets would be circling around Ireland and other bailout countries, saying when are they going to exit.
"So we need to think very carefully about the implications, not just for Greece but the rest of the eurozone countries."
The minister made the comments as European Commission President José Manuel Barroso visits Athens amid speculation that Greece could be forced out of the single currency.
Greek Prime Minister Antonis Samaras admitted on Monday that the country's recession would be worse than expected this year, but he declared Greece would remain in the euro.
Today's visit by Mr Barroso is his first to the Greek capital since 2009.
It comes as officials from the European Central Bank, International Monetary Fund and European Commission zone-in on spending cuts specified under the second EU-IMF bailout worth €130bn.
The Greek government says it will introduce the austerity measures but wants more time to achieve the bailout targets.
This is being resisted by creditor countries such as Germany, which fears that the multi-billion euro bill for assisting Greece will only increase.
Meanwhile, Spain's borrowing costs reduced marginally yesterday.
The yield or interest rate demanded by investors to buy Spanish ten-year debt fell back from 7.6% to 7.3%.
Yet given that an interest rate of more than 7% is perceived to be unaffordable, Spain remains very much in the investor firing line.
