“There is a risk of (Greece) leaving the euro but there is no automatic exit, in the same way that the vote doesn’t mean automatically that Greece stays in the euro“.
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The ECB on Monday chose to maintain the emergency liquidity assistance (ELA) at the same level set on June 26, despite a request for an increase from the Bank of Greece. The move doesn’t affect the lenders right away, but it was a warning shot by the ECB to Greek banks that their fate lies in its hands.
But Germany and France have made it clear so far that the ball was in Greece’s court and various Eurozone leaders seem more and more convinced that Greece needs to dumped.
“Expectations of a breakthrough at the high-level talks on Tuesday night were dampened by the president of the European commission, Jean-Claude Juncker”. His office did not provide details about the conversations.
But an European Central Bank governing council member, Ewald Nowotny, held out the possibility of bridge funding for Greece while a new bailout programme is being negotiated.
“Those who think that we will stabilize the eurozone and encourage discipline by expelling a country are unsafe sorcerer’s apprentices”, he said, suggesting that if Greece leaves Europe could face even deeper crises to come.
France and Germany have called Monday on Athens to make proposals “now”, insisting they respected the result of the Greek referendum.
“If we limit ourselves simply to decrease the debt without radical changes in Greece, nothing is won”, he said. ‘What we are going to do today is to talk to each other and restore order, ‘ he said.
Greek Prime Minister Alexis Tsipras and newly-appointed finance minister Euclid Tsakalatos are expected to travel to Brussels for the talks, amid speculation that a new proposal for an aid deal will be offered.
The last EU-IMF bailout for Greece expired last Tuesday, despite Tsipras’s appeals for it to be extended. After jubilant celebrations by “No” voters following their 61% referendum victory, Greeks returned to the reality of queuing at ATMs for their daily withdrawal limit of €60. Without concessions that allow Athens to invest in infrastructure and economic growth, Greece could leave the euro zone-the so-called Grexit-and start “the beginning of the end” for the common currency, Piketty said.
Heads of state meeting on Tuesday will define a position in response to Greek proposals, Hollande said.
Canadians are no longer watching Greece run out of money from afar.
The referendum followed a week that saw Greece’s banks closed and capital controls imposed, as the country teeters on the edge of complete financial meltdown.
“Fateful election”, “Nightmare of bankruptcy”, “No-ones winning”, “Hardship in Greece”, “Greek troops and police prepare for street battles” – the crisis grabbed front-page headlines and appeared to galvinize people around Europe.
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But it noted that the financial support can only be provided against sufficient collateral. But the losses were contained and there was no sign of serious contagion to other weaker euro zone sovereigns.
