Greece: now threatens national bankruptcy? – Times Online

Greece threatens national bankruptcy. How dramatic is the situation? Now comes the Grexit? And what is at stake in the referendum? The most important answers

Updated 28th June 2015 22:59 clock

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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”. As the details of the questions will look, and how they should be presented to the citizens of course, is still unclear.

Does the referendum have any consequences?

Strictly there is nothing to the Greek people could decide. The proposal from the institutions for an extension of the assistance program finally is no longer offered. Should it come to a vote, it is the opinion of constitutional lawyers very likely that will discuss 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 € 18 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 formally once in arrears. However, an insolvency already immediately on July 1 applies to definitively failed negotiations as excluded -. Formally the bankruptcy could therefore drag on for something

The second major creditors of Greece, the euro rescue fund EFSF, will probably wait and see. Theoretically, the Manager of the Fund could reclaim the loans of around € 130 billion immediately. The EFSF had granted Greece on behalf of the euro countries to date. Is considered likely that the demand for repayment applicable, but is not yet penetrated.

As the ECB will act?

This Sunday, the ECB said to keep the emergency loans (known as Ela-aids) for Greek banks to date of 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.

is how dramatic the situation ?

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.

At a special meeting of the Council of the European Central Bank, the Greek banks decided no additional emergency assistance (ELA – “Emergency Liquidity Assistance”) grant. This is the money that banks can offer their customers pay, limited. In order then to prevent a collapse of the banking system, the Bank of Greece was forced to strong measures. Firstly, the banks remain closed until July 7. Secondly, capital controls were enacted. So each customer can withdraw only 60 euros from his account per day.

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 rescue package 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. According to the Euro Group, the end of the utility will force the government in Athens to emergency measures. Euro group chief Jeroen Dijsselbloem According to it is to give technical assistance of the donors institutions in order to secure the stability of the Greek financial system.

Now comes the Grexit, the exit of Greece from the euro?

Hard to say. 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 zone 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, worth less than the euro.

The debentures are called in the financial world “IOU”, according to the 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.