The European Central Bank has the tools to deal with any situation that may emerge from Greece’s looming referendum, the bank’s vice-president Vitor Constancio said on Friday, although he declined to speculate how a “no” vote could affect the eurozone or the ECB’s lending facilities for Greece.
Advertisement
It [the haircut] would take place in the context of an overall restructuring of the bank sector once Greece is back in a bailout programme, said one person following the issue.
“This is not something that is going to happen immediately“.
“There are no such scenarios at any Greek bank, not even as an exercise on paper”, Katseli said.
“FT report of a Gk (Greek) Bank Bail In is a malicious rumour that the Head of the Greek Banks Association denied this morning”, he tweeted.
Unfortunately for Greeks, the ECB has frozen the ELA cap, meaning that as of last Sunday, Greek banks were no longer able to meet deposit outflows by tapping emergency liquidity from the Bank of Greece. That spared many small “mom and pop” local depositors (whose deposits were well below €100,000), and hit numerous larger foreign depositors who had been using Cyprus as a banking haven. But the government’s version of the FDIC only has 3 billion euros in the kitty, far short of what would be needed in the event of a bank meltdown. What should be done to protect citizen’s rights and funds?
Advertisement
Is the “bail-in” police ethical on the part of the banks? They point to far more diversified economies and stronger regulation as a backstop against experiencing the Greek nightmare. The only problem is, they should have done this months ago as the capital flight has been massive, the “poor poverty stricken’ Greeks transferred 180 billion euros out of the banks already since the election of anti-austerity party Syriza..”
