Papademos has been a leading figure in European banking, but he now faces major challenges as Greece’s new leader.
Lucas Papademos, a former European Central Bank vice-president, has been sworn in as prime minister of Greece’s new interim government, following a power-sharing deal reached by political leaders.
The swearing-in of Papademos and the new cabinet at the presidential mansion on Friday was officiated by Archbishop Ieronymos, the head of the Church of Greece.
Papademos will lead a coalition until elections, which are expected to be held in February.
The new coalition government, formed on Friday, includes ministers from the country’s two main parties – the Socialists who have governed for the past two years, and the conservatives, as well as from a smaller right-wing party.
Among those included in the cabinet is Evangelos Venizelos, retaining the key position of finance minister.
In his first comments as prime minister, Papademos said the country was at a crucial crossroads and pledged to keep it within the euro single currency bloc.
“The Greek economy is facing huge problems despite the enormous efforts made … The course will not be easy,” he said.
“I am convinced that the country’s participation in the eurozone is a guarantee for monetary stability. We must all be optimistic about the final result, as long as we are united.”
Papademos was seen by many, both inside Greece and internationally, as the best choice to steer Greece through its economic crisis due to his technocratic credentials and perceived financial expertise.
Tony Saunois of the Socialist Party in Britain speaks about his impressions of Papademos
Al Jazeera’s Andrew Simmons, reporting from Athens, said that the announcement caused “a collective sigh of relief across Europe”, and Greece’s stock market had jumped sharply when Papademos arrived at the presidential palace to begin talks with the head of state and political leaders.
His appointment took four days of talks between the two main parties, the outgoing ruling socialists and the main opposition conservatives, after George Papandreou, the Greek prime minister, on Sunday pledged to step down.
The interim government will be entrusted with securing continued bailout funding and a new $177bn rescue package for Greece from eurozone partners and the International Monetary Fund.
Greece will run out of money next month unless the new government reaches an agreement on emergency funding. Other eurozone nations have refused to give Greece its latest instalment of bailout cash, $11bn, until the country approves a second bailout deal, which took European leaders months to hash out.
But Papademos’ government faces the challenge of balancing the need for international rescue funds with the grievances of a Greek population already feeling the pain of several rounds of austerity cuts demanded by creditors as the price for bailout loans.