Greek banks are facing a full-blown crisis after Thursdays’ Eurogroup broke down, leaving the specter of Greece’s bankruptcy looming large.
Almost 3 billion euros flew out of Greek banks this week, with bank managers expecting more outflow on Friday. A representative of the European Central Bank (ECB) reportedly said that he was unsure whether Greek banks would have the funds to be able to open on Monday.
The ECB’s governing council will hold an emergency meeting on Friday to discuss a request from the Bank of Greece (BoG) for an increase in liquidity to Greek banks. The request comes just days after the ECB approved a 1.1-billion-euro increase in the Emergency Liquidity Assistance (ELA) ceiling to 84.1 billion euros.
German Chancellor Angela Merkel, French President Francois Hollande and Greek Prime Minister Alexis Tsipras agreed to call an emergency Euro Summit on Monday as a last attempt to prevent Greece from defaulting and going bankrupt. Greece has a 1.6-billion-euro repayment due to the International Monetary Fund (IMF) on June 30 and government officials have stated that there are no funds to make the payment.
The Luxembourg meeting of Eurozone Finance Ministers showed that there is acrimony on both sides. The Greek government has accused the European Commission and the IMF of making outrageous demands that lead the country’s economy into further recession.
IMF Managing Director Christine Lagarde said there is an urgent need for dialogue “with adults in the room… We can only arrive at a resolution if there is a dialogue. Right now we are short of a dialogue.”
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