Greece threatens national bankruptcy. How dramatic is the situation? Must Greece out of the euro? And what is at stake in the referendum? The most important answers
In the whole of Greece were the people at the weekend at ATMs lining up to withdraw their euros. | © Alexandrso Avramidis / Reuters
What Are the Greeks coming Sunday from
Greece’s Prime Minister Alexis Tsipras wants the Greeks in a referendum on? can decide on the austerity package 5th of July. On Saturday evening, the Greek Parliament for the vote agreed. Tsipras called the population, “a big no to ultimatum” of creditors and to say “a great ‘yes’ to Europe and to solidarity”. On Sunday published European Commission President Jean-Claude Juncker the recent state of negotiations – “in the interest of transparency.”
As the details of the questions look, and how they should be presented to the citizens of course, is still unclear. According to surveys, want to stay in the euro zone, a clear majority of Greeks. In addition, most citizens support a compromise with creditors, as is apparent from two surveys, but come from the days before the decision on the referendum.
Does the referendum have any consequences?
Strictly there is nothing to the Greek people could decide. Officially, the Euro Group has run out, the second rescue program of June 30 last Saturday, an extension is not provided. Would the Greek people decide for savings and reforms, the Greek Government would have to apply for a new reform program: the third aid package. According to state law experts, it is also more likely to be received several constitutional complaints against the vote in the near future.
Slips Greece now in the state bankruptcy?
On Tuesday the utility of Europeans for Athens runs out. This fall still standing by grants totaling around EUR 15.5 billion. Greece will have to repay in the coming days a debt rate of around 1.6 billion euros to the International Monetary Fund (IMF). If Greece does not achieve this, the country is according to the IMF in relation to the Monetary Fund in arrears. IMF chief Lagarde has announced to inform immediately in this case the IMF Council of the insolvency. There is no grace period. This in turn has consequences for the loans of the European rescue fund EFSF / ESM, which are also due then. Theoretically, the Manager of the Fund could reclaim the loans of around 131 billion euros immediately, but probably they are still waiting on.
How is the ECB to act?
On Sunday, the ECB agreed to the emergency loans (known as ELA-aids) for Greek banks to date of to hold around 90 billion euros. With these loans, the Greek central bank can provide the commercial banks of the country continue with emergency loans. The fact that the ECB does not continue turning up the money supply still, however, is likely to aggravate the situation of the Institute. A normal business operations will probably no longer be held. The ECB is also always ready to reconsider its decision, according to a published after the meeting of the Governing Council declaration.
The ECB helps Greece with emergency loans from some time in order to prevent a collapse of the banking sector. The banks are facing problems because the Greeks billions rooms of the accounts. The aids are therefore the last way in which the Greek financial system is still supplied with euros. A complete stop of the emergency loans would Greece forced to introduce a new currency.
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On Sunday, the Greek central bank announced that until July 6, the banks remain closed. So she wants to stop the outflow of capital. Thus, every Greek stand only 60 euros from his account per day – for foreigners, there is no upper limit, but it is questionable whether they get easily their desired buzz at the vending machine. The stock exchange in Athens will be closed until at least July 7.
On Saturday the situation was tense in the banking sector. Several hundred million euros have lifted alone on the day at ATMs, the Greeks. The estimate of one billion euros would not confirm an EU official, is completely wrong but would not be so. Result is that the banks bleed out, you can not borrow more money to companies, economic activity succumbs.
Will there be a third rescue package?
The Greek Government can make an application for financial assistance to the European rescue fund ESM. In return, they will but must be committed to austerity measures and structural reforms again. To negotiate a third bailout, will however take months and be a tough process again. Where this is not a debt, Greece has already repay to the ECB in July of 3.5 billion euros. But it is this sum can not lift.
The second reform program, which was negotiated so hotly over the past week, already a solid foundation for a third package is available. Thus, the negotiators would not have to start from scratch. However, it needs at least the approval of the Bundestag and to even to begin negotiations on a third package.
Now comes the Grexit, the exit of Greece from the euro?
to say heavy. A bankruptcy Athens would not automatically the euro from Greece – ie the Grexit – result. In any case, no EU institution, nor the European Central Bank may take the country out of the euro. This is not provided simply by the Treaties. However, there are some rudimentary provisions to phase out the EU. A Grexit would be legal territory.
It is clear that the government in Athens must decide to remain in the Euro. Prime Minister Alexis Tsipras and his finance minister have repeatedly said that Greece wants to remain in the euro. The Euro finance ministers have emphasized this.
How might a parallel currency?
Greece could introduce a parallel currency, perhaps in the form of promissory notes. Because the state lacks cash, paying civil servants and pensioners, at least in part from with IOUs. In order yet to make any transactions, traders and service providers would accept the IOUs as payment. Due to the risk the IOUs would, however, be worth less than the euro.
The debentures are called in the financial world IOU, after English I Owe You (I owe you). California reached in the summer of 2009 successfully on the tools back, in order to bridge a bust phase.
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