No solution in sight or the Greek problem

On Sunday, Greece voted no to the referendum offered to them by the Eurozone. After the vote many of the citizens were noticed celebrating the result on the streets and showed their support towards the government. Greece has been pushing to get a much sweeter deal from the Eurozone for the past five months since the negotiations began, but all the talks have been in vain.Now the “no” vote means that the banks which have been shut down for last week will continue to be so for an uncertain period of time. All this time the European Central Bank has been supporting them and on Monday it made it harder for the Greek lenders to tap the emergency loans, tightening collateral rules. According to various sources, the banks will need ECB aid to keep them ticking. Apart from this, capital from shareholders, bondholders or the savings of the customers might be essential.

Image: Greece Flag (Public Domain)

Citigroup Inc. European banking analysts led by Ronit Ghose wrote in a note to clients, “Greek banks could easily require an additional 10 billion Euros ($11 billion) of equity capital if grimbo continues, perhaps more, diluting existing shareholders. In the context of grexit, a full nationalization is likely.” With the banks closed and daily ATM withdrawals limited to 60 Euros, the financial position of Greece will be discussed by the Prime Minister Alexi Tsipras and other European leaders.

Greece has been issued the next deadline as July 20 but the experts and analysts have predicted that the country is likely to miss that one too. On July 20, Greece is required to make a booking redemption payment of 3.9 billion to the European Central Bank. The analysts at Barclays have also forecasted that July 20 would mark the end of hopes for Greece in the Eurozone.

 The analysts said that failure of the payment would be disastrous for Greece in many ways. It would make it impossible for the ECB to lend any more money to them which would ultimately lead to the failure of the banks in Greece. Although Greece had asked for a delay from the ECB on the payment but the experts believe the chances of getting out are quite thin.