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Political leaders in Greece need to show the resolve to stay in the euro zone, which will require Athens to stick to the terms of its rescue package, International Monetary Fund Managing Director Christine Lagarde said on Thursday.

The head of Greece’s top administrative court, Panayiotis Pikrammenos, was named the nation's caretaker prime minister Wednesday as voters prepare for another election on June 17 that is widely viewed as a referendum on whether Greece stays in or leaves the Eurozone.

Stocks fell and the spread between Spanish and German bonds hit a record wide, as the prospect of fresh elections heightened concerns about the likelihood of Greece exiting the euro zone.

Europe’s debt crisis is going from bad to worse. The borrowing rates for troubled--and even not-so-troubled--European governments once again soared Friday, heightening the danger of an all-out collapse in Europe’s common currency. It comes as political leaders across the continent are all pointing to each other as needing to act to avert a worse outcome.

European Commission chief Jose Manuel Barroso tells MEPs that Greece will stay in the eurozone but warns the EU is facing its "greatest challenge".