"This is really not an option," Papademos said in an interview in which he expressed confidence in Greece's ability to convince private investors to accept a 50 percent devaluation of their holdings in Greek debt.
He also said that Greece would come up with a four-year economic plan that would meet with approval from the International Monetary Fund and the European Union.
If no viable plan is approved by the IMF and the EU, Greece would not be granted about $164.7 billion in low-interest loans it needs to meet its obligations in the medium term, CNBC reported Monday.
In the long-term, Greece has debt obligations of about $261 billion.
Papademos said Greece was "close to an agreement" with creditors and that Friday's announced suspension of talks was not a sign of negotiations breaking down, but simply a "pause for reflection."
What investors will accept is tied to the terms involved with reducing the value of their holdings. The current plan is to pay bondholders 15 percent cash and 35 percent in new debt for each 100 percent of their holdings, the report said.
To accept such a write-off, bondholders are looking for 8 percent interest on new debt, but the IMF has said the new rate should be 2 percent.
Papademos, in the meantime, said having Greece return to its own currency had very little support.
"This is the position of this government and of all the parties that are supporting it, and what is more important, the overwhelming majority of the Greek people are in favor of Euro area membership," he said.