UPDATE 1-Weber says Greek default impact "incalculable"
* Weber says aid to Greece best solution
* Bundesbank president rejects bank "haircut" discussion
(Adds quotes, background)
BERLIN, April 29 (Reuters) - A Greek debt default would have "incalculable" consequences for financial markets and other states, European Central Bank Governing Council member Axel Weber told a German newspaper.
Weber also dismissed a discussion about forcing banks to accept a discount on their holdings of Greek bonds as "counter-productive", although he said it was appropriate to discuss whether banks should help pay costs linked to the broader financial crisis.
"In the current situation, the impact (of a Greek default) on financial markets and other states would be incalculable," Weber told the Thursday edition of Bild. "Financial aid tied to tough conditions are for all parties concerned the best solution."
Weber, who is head of the German Bundesbank, said Greece could "turn the corner" if it moved to implement reforms of its economy in a decisive and credible way. Kicking Greece out of the euro zone, Weber warned, could spark huge economic and financial upheaval and he said there was no legal basis for such a move.
Asked whether German banks should participate in an aid package for Greece that officials have estimated at up to 135 billion euros, Weber said: "Of course we need a discussion about financial institutions participating in the costs of the broader financial crisis."
But he added: "I believe the current ad-hoc discussion (on banks participating in a Greek aid deal) is counter-productive. We need to create the conditions that allow us to respond rapidly and effectively. Only that way can we bring stability to the markets and prevent things from worsening."
Some German politicians have argued that banks should take "haircuts" on their holdings of Greek bonds, but others including members of the government have rejected that.
(Writing by Noah Barkin; Editing by Susan Fenton)