Greece should brace itself for some form of capital controls, say analysts at Credit Suisse. As Greece has closed the door on making a deal with its international creditors, we can expect urgent fiscal control measures to come in from Monday.
Here’s more from a Credit Suisse note sent on Friday:
“A “No deal” scenario will probably lead to a bank holiday and then capital controls in Greece pretty soon, in our view. Monday being the first and more likely date in such a case, we believe. A policy reaction from the ECB (even more liquidity provided) and political initiatives should also be expected.”
Expect updates from Greek Finance Minister Yanis Varoufakis about capital controls being planned at 1pm.
Will Germany, the richest member of the eurozone, allow a Grexit to happen?
Before the referendum decision was announced this weekend, Germany’s Angela Merkel begged Greek Prime Minister Alexis Tsipras to accept a “very generous offer” which demands that €3.9bn is raised through tax hikes and pensions reforms in 2016.
“We made it very clear to Mr Tsipras that it ought to be accepted,” said Ms Merkel, whose attitude has hardened against the government during five-months of protracted and ill-tempered negotiations.
Despite Alexis Tsipras’ insistence the people of Greece would say “an emphatic no” to creditor demands, opinion polls suggest otherwise.
Two polls published in Greek newspapers today indicate that most Greeks want to keep the euro and would prefer to keep European officials on side.
In a poll published the Proto Thema Sunday paper, 57pc said they believed Greece should make a deal with its EU partners, while 29pc wanted to break away.
Separately, 47pc of respondents told the To Vima newspaper they wanted a deal with the EU, compared to 33pc who would vote no and 18.4pc who were undecided.
Both nationwide polls were conducted earlier this week, before the decision to call a referendum last night.
Many Greeks are still nervous at what the uncertainty means for their finances, as this queue for an ATM in Thessaloniki, yesterday, suggests.
Greece’s economy is in a perilous state. Bank deposits have fallen to an 11-year low, pushing the financial system to the brink of insolvency. Emergency cash from the ECB, which has topped €88bn since February, is the only thing propping up the country’s banks.
Greek Prime Minister Alexis Tsipras appears resigned to the possibility of a Grexit. Speaking before the Greek parliamentary vote last night on whether to hold a referendum on 5 July, he said he was confident the Greek people will say “an emphatic no” to the country’s creditors demands.
The creditors have not sought our approval but have asked for us to abandon our dignity. We must refuse.
Stunned lenders vow not to extend Greece’s bail-out and say they are prepared to suffer the consequences of “bombshell” referendum decision
Greece stands on the brink of a banking collapse and disorderly exit from the euro after its creditor powers lashed out at Athens’ plans to hold a referendum by vowing to pull the plug on the country in just three days.
Unless the cash-strapped country can scramble together €1.55bn Tuesday, it will become the first developed country in history to default on its International Monetary Fund loan on June 30. On the same day, it’s €240bn rescue programme will also formally expire throwing its banking system into turmoil.
Mr Dijsselbloem warned the Leftist government faces collapse, and suggested it was deluding its public by claiming they could win a better deal by rejecting the bail-out offer in a public vote.
“If there is a ‘no’, the suggestion might be to Greek people that there is a better deal ahead, and negotiations can open.
“But in the intervening period, the situation in Greece will deteriorate very rapidly. How the Greek government thinks it will survive and deal with its problems in that period, I do not know.”