Following a meeting with the opposition leader, Mr Papandreou revealed he will step down for the good of the nation as a national unity administration is thought to be the best way to prevent a complete financial meltdown.
Banks across the eurozone have struggled in recent times due to the continuing uncertainty surrounding the proposed bailout package for Greece, but this development seems to make it clear the country is committed to the region.
Sacha Tihanyi, currency strategist at Scotia Capital, told Bloomberg: "If we take it to mean that Greece is making efforts to ensure that they continue to receive funding support from the eurozone, then the move is positive."
This comes after orginal plans from Mr Papandreou to put the bailout to a referendum were shelved.
By Asim Shah