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Greece debt crisis: ECB 'to end' bank emergency lending

66 points by YPetrov 11y ago

lifeisstillgood 11y ago
tl;dr ECB has leaked to BBC they will cut off emergency lending that covers the panic withdrawals. This will kill the deal and force a grexit, even before 5 July referendum. However French PM does not think they have enough independence to do that. So we have a democratic nation potentially forced to leave Euro, after democratically deciding it no longer wants the austerity imposed, being forced to leave by non democratic ECB while the democracies that appoint the ECB think it is going too far. What's that quote from Hunt For Red October - "with all these planes in the sky, it's only a matter of time [before we start a war]" The lesson for democracy - force governments who are going to adjust fiscal measures past a certain point to get referendum approval - and look how well that works in California...
- drited 11y ago
  What's the alternative for the ECB? Give €129 bn to Greek banks to replace the deposits that are bound to flee this week only to see it lost when they default after saying no in the referendum? The Greek banks would have been bust long ago if it wasn't for the ECB's emergency lending; they've been provided with €60 bn in liquidity over the last 6 months to replace the deposit flight. Not sure how you can characterise that as Greece being forced to leave by a decision from the ECB. Looks more to me like they have to leave because there are no other options left.
  - deleted 11y ago
    [deleted]
  - harywilke 11y ago
    The alternative is to start investing in Greece. To build up it's economy so we can end the Greek Depression. As it stands now the austerity packages have cut 30% off of the economy and increased the unemployment rates to nearly 30%, 50% of the youth. Those are Great Depression size numbers. Hard to collect taxes when people are not working. All these bailouts are basically just the Troika hand wringing about giving money to themselves while the country they are helping is bled dry. To date the IMF have made about 2.5 Billion, Germany profited to the tune of 100 Billion.
    - drited 11y ago
      I asked what the alternative for the ECB was and you suggested the alternative was to invest in Greece. Are you suggesting that the ECB should invest in Greece to build up its economy or are you conflating my question regarding what the alternative for the ECB was with a question which I did not ask regarding what European institutions in general should do?
      - lifeisstillgood 11y ago
        To roughly answer the above questions - the ECB and IMF need to stop. This is above their pay grade. This is a problem caused by a fixed exchange rate (single currency) at the wrong rate for Greece and co. Without a mechanism to adjust prices for differences in cost and productivity Euros looked really cheap to borrow from germane but olive oil looked really expensive to buy in. (Germany presses and bottles and exports more olive oil from Greek olives than Greece does) The only way to solve the problem long term is to move the money from richer (urban) parts of Europe to poorer rural parts. Stupid ideas like the CAP don't really help. Redistributive taxation across Europe (ie Federal taxes and Federal government) are the next step. But that is waaaaay out of the ECBs remit. Syriza is basically saying - fine break my legs, but only if you can promise a European wide discussion on how we got into this mess and what a federal Europe will look like
- michaelt 11y ago
  while the democracies that appoint the ECB think it is going too far. Often in politics you want someone to feel threatened, but you don't want to look like an asshole by threatening them yourself. I'm sure France and Germany can put up the money to cover profligate Greek public spending if they want to. But if they've decided Greece needs to be cut off, I'm sure they'd much rather have an anonymous non-german non-french bureaucrat deliver the bad news than do it themselves.
  - Frozenlock 11y ago
    It works at all scales: "I'd love to give you a raise, but corporate is making big cuts everywhere... I'll do what I can for you, but I can't make promises."
- raesene9 11y ago
  I'm not sure that the ECBs action is the cause so much as the effect. My understanding of this was that the greek banks are (without ECB help) insolvent and have been for some time. They are unable to raise capital on the open market, as the open market has decided that they are not confident enough in those banks to lend them money. As a result the Emergency Liquidity Assitance from the ECB has been used, but that was only provided on the basis that the greek banks were solvent but had temporary liquidity problems. As far as I understand it, as soon as Greece is no longer in a bailout Program (Tuesday by current reckoning) those banks will not be solvent any more (they hold large amounts of Greek government debt), and ELA can't (without some form of change of rules for the ECB) continue. The ECB is just following it's rules and it's been known that this approach is where they would likely need to go for some time, absent a political intervention from the Europgroup or the IMF.
imaginenore 11y ago
It's about time. Greece has been behaving like a gambling addict, asking for money to repay the old debts only to waste them in expensive restaurants, buying iPhones, and gambling even more.
- TazeTSchnitzel 11y ago
  Gambling addict? What an incredibly unfair and childish characterisation. Greece is not a person, Greece is a nation state. It has implemented severe fiscal cutbacks after being forced to by its creditors. Cutbacks which have ruined the country's economy, massively increased poverty, and made it more difficult to pay back its debts. Now its people have voted in a government that wishes to make different reforms. Ones that also keep the book balanced, but do not hurt the weakest in society as much or destroy economic productivity.
  - honest_joe 11y ago
    So? Much poorer countries had to support greece. How come a poor slovakia should fund the lifestyle of lazy greeks? No thanks
    - TazeTSchnitzel 11y ago
      > How come a poor slovakia should fund the lifestyle of lazy greeks? The Greeks are not lazy. Suffering is not lazy.
      - celticninja 11y ago
        He may not be correct in what he is saying, but the underlying message is that Greece and the Greeks were enjoying the benefits of the EU on the never never, their attitude to taxation was part of the problem and now Greece expects to be taken care of by the rest of the EU taxpayers who actually pay their taxes. They don't want to affect their pensioners but it is many of those pensioners who benefitted the most from the money years of the EU. So I guess the question is who should be paying for Greece's poor financial planning because Greece do not appear to think it should be them.
themartorana 11y ago
As I understand it, one of the major underlying issues this whole time (aside from the silliness of trying to integrate Greece's economy with Germany's) was the ECB's refusal to act as the lender of last resort. This seems like an affirmation of that. If Greece exits the Euro, I wonder if that will embolden other countries to do the same.
- elmar 11y ago
  If they leave and manage to kick-start the economy that i doubt very much they will manage to do, yes other countries will start to wonder, the next in line is Portugal with the highest speeding in % of GDP of government debt in Europe.
- chki 11y ago
  I think the ECB is actually not allowed to do that, because Europe (better: The countries of the Euro Zone) is not a debt union. If the Countries were paying for each other regardless of structural reforms, Europe would need to be constructed in a different way (with an actual central government). To address your other point: I think the horrible situation that will arise in Greece in the following weeks/months will make other countries certainly think twice about getting out of the Euro.
  - TheOtherHobbes 11y ago
    No, if Greece exits then Italy, Spain, and France will be the next to get the treatment. A Grexit will mean the end of the beginning of the end for the EU and a move towards nationalism and/or fascism across the rest of Europe. Most countries have growing anti-EU nationalist movements, and ass-raping Greece isn't going to make them less popular. But the IMF have no interest in a strong Europe, because before 2008 European policy was heading in an aggressively anti-corporate direction. A bleeding and uncertain Europe with a population terrified of poverty and old age is much more to their liking. Remember total QE lending to banks is the far side of $2.5tn, and most of it is secured against assets that are clearly worthless. The IMF itself is happy to agitate against austerity when it suits its political aims, and to hand out money that's unlikely to be repaid: see also, Ukraine. So this is a purely political pantomime. Greek solvency is simply a pretext for political power plays - another attempt to enforce the usual neo-liberal "reform" agenda which aims to destroy the last century's traditions of socially responsible government spending.
jkot 11y ago
There were similar leaks from ECB to force Irish to take bailout. Anyway we will see on monday, right now some ATMs in athens are still working.
- lmb 11y ago
  Since this is [citation needed] I dug around. Seems like yes, the ECB pressured Ireland into accepting a bailout by threatening them to shut down ELA. But in fact they did it in a secret letter from Trichet to the then finance minister. Getting that letter released took some pressure, as well. [0][1] So, the only similarity seems to be the ECB threatening to pull ELA. There has alreay been debate that the ECB is already overstepping their mandate, but I can't find an English source for that. 0: http://www.irishtimes.com/business/economy/o-reilly-hits-out-at-ecb-for-lack-of-transparency-on-irish-bailout-1.1716321 http://www.irishtimes.com/business/economy/o-reilly-hits-out... 1: http://www.bbc.co.uk/news/business-29942060 http://www.bbc.co.uk/news/business-29942060
  - jkot 11y ago
    My source is former Irish financial minister talking at parliamentary commission, which investigated crisis, a few months ago. Dont really remember details.
MichaelMoser123 11y ago
What kind of capital controls? in this situation it is quite an oxymoron. With a different currency you can control the exchange rate or limit how much one is allowed to exchange, however Greece still has the same internal currency - the Euro. You don't have a Greek euro only - its the same currency. To me all these conflicting reports smell like panic; decision makers just don't know what to do now, and the BBC does not know what to report. Sounds like 2008 all over again.
- debtopolis 11y ago
  Interesting - just tried to Google translate into Greek, but apparently there are no words in their language for "repay your debts!"
- pjc50 11y ago
  Cyprus imposed capital controls while remaining in the Euro. Restrictions on bank transfers and cash crossing the border.
  - MichaelMoser123 11y ago
    interesting. Now how is the economy supposed to function with limitations on bank transfer? Wouldn't that make it difficult to repay debt?
    - pjc50 11y ago
      Lots of paperwork, I think. Every non-trivial transfer requires approval. Here's how it used to work in the UK until 1979: http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1967/qb67q3245260.pdf http://www.bankofengland.co.uk/archive/Documents/historicpub... Edit: yes, this makes commerce difficult. A finance correspondent I follow on twitter says to expect petrol rationing.
randomname2 11y ago
The BBC should know better than this, using "unnamed sources" to quote a rumour as fact. No decision has been made yet, so this is just misinformation. Expect more of this over the next days.
- icebraining 11y ago
  Reminds me of Yes, Minister: - Can I attribute it? "Minister speaks out"? - No, no, no. - Then, where did I get the story? I can't say, "Officially announced." - "Government spokesman"? - How about, "Sources close to Minister"? - Hold on, I don't want everybody to know I told you! Couldn't you do, "Speculation is growing in Westminster"? - A bit weak. - "Unofficial spokesman"? - Used that twice this week already! - The Cabinet's leaking like a sieve, isn't it?
- peteretep 11y ago
  > "unnamed sources" This doesn't mean it was a friend's uncle's brother told them, it means someone in a position to know intentionally leaked it.
  - vidarh 11y ago
    But not knowing who leaked it takes away the very important opportunity to judge their motivations for leaking it, which again has a substantial bearing on how believable a leak is.
- raesene9 11y ago
  Unfortunately this is extremely common in many countries where politicians and civil servants want something out without having it tied to them. If you've been following the greece coverage, there's been lots of documents leaking from various sources on both sides of the negotiations. Last week when the initial greek proposal and the IMF "red-lined" version were in discussion, both were leaked on the day...
  - peteretep 11y ago
    > in many countries where politicians and civil servants > want something out without having it tied to them I wonder if there are any democracies where this mechanism isn't used
elmar 11y ago
They have to impose capital restrictions fast... What Would Greek Capital Controls Look Like? http://www.bloomberg.com/news/articles/2015-06-01/how-greek-capital-controls-would-work-if-deadlock-persists-q-a http://www.bloomberg.com/news/articles/2015-06-01/how-greek-...
- chkuendig 11y ago
  Varoufakis apparently told BBC that the banks might stay closed tomorrow and that capital controls could be imposed. http://twitter.com/suttonnick/status/615112479828348928 http://twitter.com/suttonnick/status/615112479828348928 edit: scratch that. http://twitter.com/yanisvaroufakis/status/615127339102531584 http://twitter.com/yanisvaroufakis/status/615127339102531584
  - elmar 11y ago
    Not imposing capital restrictions is suicide, i don't know if Yanis varoufakis is an economical genius a madman or simply amateurish.
    - randomname2 11y ago
      Well, by first saying "capital controls" and then "no capital controls", Varoufakis just kept in line with the diplomatic strategy of Greece, which has been to promptly deny everything it has just said.
    - debtopolis 11y ago
      He has an impossible job - when taxes are not paid, people retire at forty, government jobs pay people even higher salaries because they actually turn up, then any chance of balancing the books is looking like a Greek tragedy.
      - Confusion 11y ago
        Please stop repeating things you don't actually know are true. Greeks work hard and don't retire at 40. Their work ethic is not the problem. Not paying taxes is a problem. The amount of pensions paid is also a problem. Individual Greek people are the victim as much as the lenders whose loans are defaulted on (iincluding me, via my country's contributions)
dataker 11y ago
>after five years of lender-imposed austerity that has increased Greek unemployment That's a very easy target. Probably easier to ignore the high cost of hiring, bureacracy, corruption,...
randomname2 11y ago
ECB statement: ELA to Greek banks maintained at its current level - ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme - ECB will work closely with Bank of Greece to maintain financial stability - Emergency liquidity assistance maintained at Friday’s (26 June 2015) level - Governing Council stands ready to review decision - Governing Council closely monitoring situation and potential implications for monetary policy stance The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union. Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability. Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015). The Governing Council stands ready to reconsider its decision. Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.” Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.” The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate. https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.e...
- debtopolis 11y ago
  The Greek version of monopoly - they cleaned out the bank early, and everyone loses (game over!)
  - randomname2 11y ago
    The ELA freeze was for Sunday. It will be reviewed on a daily basis.
deleted 11y ago
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- randomname2 11y ago
  While that may be what the statement says, the other part of that statement is that the Greek ELA program has been frozen. As such it is only a matter of time before the entire program is unwound a la Cyprus in March 2013.
the-dude 11y ago
Just now : ELA continued : http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en...
- jpmattia 11y ago
  The title is not particularly clear. "Continued" means that the ELA is maintained at the current level. Put another way, there will be no further increase in ELA and the Greek banks have used the previous allotment, so their coffers are running dry. It will be a very tough week in Athens.
estefan 11y ago
And now it will continue: http://www.bbc.com/news/world-europe-33304674 http://www.bbc.com/news/world-europe-33304674
sambe 11y ago
Several people are interpreting "stays the same" as good news for Greece and contrary to the article. I interpret it as the opposite: it will not expand further to meet the demand, thus Greek banks will run out of money. I didn't have the impression anyone expected the full amount to be recalled.
- randomname2 11y ago
  The article was incorrect by stating ELA would be "turned off", as it will merely be frozen, or at least the ECB is saying so. However if the ECB follows through on this, the end result may be the same and it's only a matter of time before the entire ELA bailout is unwound like in Cyprus.
  - sambe 11y ago
    The article seems a little confusing/confused but not strictly incorrect. There is no statement that the full amount would be recalled. The value of ELA has effectively become the extensions - the newly-lent money is being withdrawn daily. "Ending" this and refusing increase the limit could be considered the same.
DanielBMarkham 11y ago
They say that newspapers readers and television viewers love a train wreck, a situation where everybody knows very bad things are coming and we all pop the popcorn and watch. It's a sad reflection on human nature, but audience numbers prove it out. But wow, the Grexit is painful even when put into the train wreck category. It's going on and on, and the invective, hate, and hard feelings linger and fester. The amount of misery this has produced seems vastly out of proportion to the incident itself. I wonder if severe, immediate action taken at the beginning of the crisis wouldn't have resulted in something much less painful than this. 25% shrinkage in the economy and then massive bank closings? Good grief. It's becoming reminiscent of post WWI Germany.
zapdrive 11y ago
Its times like these that I seriously consider buying more bitcoins. Capital controls are totally unjust, in a free country. And it can happen in any country. The governments need to get their act together, instead of punishing innocent citizens. Why does a centrally controlled currency even need to exist in the first place?
- debtopolis 11y ago
  Errrm, moving more transactions outside the general economy wouldn't have helped Greece. Paying taxes might have. Being fiscally responsible might have. Not letting everyone retire at forty might have. Cutting the red tape might have. Not cooking the books might have.
- deleted 11y ago
  [deleted]
jacquesm 11y ago
Flagging this, way too much un-informed nonsense in this thread, lots of heat and little or no light.

66 points by YPetrov 11y ago

tl;dr ECB has leaked to BBC they will cut off emergency lending that covers the panic withdrawals. This will kill the deal and force a grexit, even before 5 July referendum. However French PM does not think they have enough independence to do that. So we have a democratic nation potentially forced to leave Euro, after democratically deciding it no longer wants the austerity imposed, being forced to leave by non democratic ECB while the democracies that appoint the ECB think it is going too far. What's that quote from Hunt For Red October - "with all these planes in the sky, it's only a matter of time [before we start a war]" The lesson for democracy - force governments who are going to adjust fiscal measures past a certain point to get referendum approval - and look how well that works in California...

drited 11y ago
What's the alternative for the ECB? Give €129 bn to Greek banks to replace the deposits that are bound to flee this week only to see it lost when they default after saying no in the referendum? The Greek banks would have been bust long ago if it wasn't for the ECB's emergency lending; they've been provided with €60 bn in liquidity over the last 6 months to replace the deposit flight. Not sure how you can characterise that as Greece being forced to leave by a decision from the ECB. Looks more to me like they have to leave because there are no other options left.
- deleted 11y ago
  [deleted]
- harywilke 11y ago
  The alternative is to start investing in Greece. To build up it's economy so we can end the Greek Depression. As it stands now the austerity packages have cut 30% off of the economy and increased the unemployment rates to nearly 30%, 50% of the youth. Those are Great Depression size numbers. Hard to collect taxes when people are not working. All these bailouts are basically just the Troika hand wringing about giving money to themselves while the country they are helping is bled dry. To date the IMF have made about 2.5 Billion, Germany profited to the tune of 100 Billion.
  - drited 11y ago
    I asked what the alternative for the ECB was and you suggested the alternative was to invest in Greece. Are you suggesting that the ECB should invest in Greece to build up its economy or are you conflating my question regarding what the alternative for the ECB was with a question which I did not ask regarding what European institutions in general should do?
    - lifeisstillgood 11y ago
      To roughly answer the above questions - the ECB and IMF need to stop. This is above their pay grade. This is a problem caused by a fixed exchange rate (single currency) at the wrong rate for Greece and co. Without a mechanism to adjust prices for differences in cost and productivity Euros looked really cheap to borrow from germane but olive oil looked really expensive to buy in. (Germany presses and bottles and exports more olive oil from Greek olives than Greece does) The only way to solve the problem long term is to move the money from richer (urban) parts of Europe to poorer rural parts. Stupid ideas like the CAP don't really help. Redistributive taxation across Europe (ie Federal taxes and Federal government) are the next step. But that is waaaaay out of the ECBs remit. Syriza is basically saying - fine break my legs, but only if you can promise a European wide discussion on how we got into this mess and what a federal Europe will look like
michaelt 11y ago
while the democracies that appoint the ECB think it is going too far. Often in politics you want someone to feel threatened, but you don't want to look like an asshole by threatening them yourself. I'm sure France and Germany can put up the money to cover profligate Greek public spending if they want to. But if they've decided Greece needs to be cut off, I'm sure they'd much rather have an anonymous non-german non-french bureaucrat deliver the bad news than do it themselves.
- Frozenlock 11y ago
  It works at all scales: "I'd love to give you a raise, but corporate is making big cuts everywhere... I'll do what I can for you, but I can't make promises."
raesene9 11y ago
I'm not sure that the ECBs action is the cause so much as the effect. My understanding of this was that the greek banks are (without ECB help) insolvent and have been for some time. They are unable to raise capital on the open market, as the open market has decided that they are not confident enough in those banks to lend them money. As a result the Emergency Liquidity Assitance from the ECB has been used, but that was only provided on the basis that the greek banks were solvent but had temporary liquidity problems. As far as I understand it, as soon as Greece is no longer in a bailout Program (Tuesday by current reckoning) those banks will not be solvent any more (they hold large amounts of Greek government debt), and ELA can't (without some form of change of rules for the ECB) continue. The ECB is just following it's rules and it's been known that this approach is where they would likely need to go for some time, absent a political intervention from the Europgroup or the IMF.

imaginenore 11y ago

It's about time. Greece has been behaving like a gambling addict, asking for money to repay the old debts only to waste them in expensive restaurants, buying iPhones, and gambling even more.

TazeTSchnitzel 11y ago
Gambling addict? What an incredibly unfair and childish characterisation. Greece is not a person, Greece is a nation state. It has implemented severe fiscal cutbacks after being forced to by its creditors. Cutbacks which have ruined the country's economy, massively increased poverty, and made it more difficult to pay back its debts. Now its people have voted in a government that wishes to make different reforms. Ones that also keep the book balanced, but do not hurt the weakest in society as much or destroy economic productivity.
- honest_joe 11y ago
  So? Much poorer countries had to support greece. How come a poor slovakia should fund the lifestyle of lazy greeks? No thanks
  - TazeTSchnitzel 11y ago
    > How come a poor slovakia should fund the lifestyle of lazy greeks? The Greeks are not lazy. Suffering is not lazy.
    - celticninja 11y ago
      He may not be correct in what he is saying, but the underlying message is that Greece and the Greeks were enjoying the benefits of the EU on the never never, their attitude to taxation was part of the problem and now Greece expects to be taken care of by the rest of the EU taxpayers who actually pay their taxes. They don't want to affect their pensioners but it is many of those pensioners who benefitted the most from the money years of the EU. So I guess the question is who should be paying for Greece's poor financial planning because Greece do not appear to think it should be them.

themartorana 11y ago

As I understand it, one of the major underlying issues this whole time (aside from the silliness of trying to integrate Greece's economy with Germany's) was the ECB's refusal to act as the lender of last resort. This seems like an affirmation of that. If Greece exits the Euro, I wonder if that will embolden other countries to do the same.

elmar 11y ago
If they leave and manage to kick-start the economy that i doubt very much they will manage to do, yes other countries will start to wonder, the next in line is Portugal with the highest speeding in % of GDP of government debt in Europe.
chki 11y ago
I think the ECB is actually not allowed to do that, because Europe (better: The countries of the Euro Zone) is not a debt union. If the Countries were paying for each other regardless of structural reforms, Europe would need to be constructed in a different way (with an actual central government). To address your other point: I think the horrible situation that will arise in Greece in the following weeks/months will make other countries certainly think twice about getting out of the Euro.
- TheOtherHobbes 11y ago
  No, if Greece exits then Italy, Spain, and France will be the next to get the treatment. A Grexit will mean the end of the beginning of the end for the EU and a move towards nationalism and/or fascism across the rest of Europe. Most countries have growing anti-EU nationalist movements, and ass-raping Greece isn't going to make them less popular. But the IMF have no interest in a strong Europe, because before 2008 European policy was heading in an aggressively anti-corporate direction. A bleeding and uncertain Europe with a population terrified of poverty and old age is much more to their liking. Remember total QE lending to banks is the far side of $2.5tn, and most of it is secured against assets that are clearly worthless. The IMF itself is happy to agitate against austerity when it suits its political aims, and to hand out money that's unlikely to be repaid: see also, Ukraine. So this is a purely political pantomime. Greek solvency is simply a pretext for political power plays - another attempt to enforce the usual neo-liberal "reform" agenda which aims to destroy the last century's traditions of socially responsible government spending.

jkot 11y ago

There were similar leaks from ECB to force Irish to take bailout. Anyway we will see on monday, right now some ATMs in athens are still working.

lmb 11y ago
Since this is [citation needed] I dug around. Seems like yes, the ECB pressured Ireland into accepting a bailout by threatening them to shut down ELA. But in fact they did it in a secret letter from Trichet to the then finance minister. Getting that letter released took some pressure, as well. [0][1] So, the only similarity seems to be the ECB threatening to pull ELA. There has alreay been debate that the ECB is already overstepping their mandate, but I can't find an English source for that. 0: http://www.irishtimes.com/business/economy/o-reilly-hits-out-at-ecb-for-lack-of-transparency-on-irish-bailout-1.1716321 http://www.irishtimes.com/business/economy/o-reilly-hits-out... 1: http://www.bbc.co.uk/news/business-29942060 http://www.bbc.co.uk/news/business-29942060
- jkot 11y ago
  My source is former Irish financial minister talking at parliamentary commission, which investigated crisis, a few months ago. Dont really remember details.

MichaelMoser123 11y ago

What kind of capital controls? in this situation it is quite an oxymoron. With a different currency you can control the exchange rate or limit how much one is allowed to exchange, however Greece still has the same internal currency - the Euro. You don't have a Greek euro only - its the same currency. To me all these conflicting reports smell like panic; decision makers just don't know what to do now, and the BBC does not know what to report. Sounds like 2008 all over again.

debtopolis 11y ago
Interesting - just tried to Google translate into Greek, but apparently there are no words in their language for "repay your debts!"
pjc50 11y ago
Cyprus imposed capital controls while remaining in the Euro. Restrictions on bank transfers and cash crossing the border.
- MichaelMoser123 11y ago
  interesting. Now how is the economy supposed to function with limitations on bank transfer? Wouldn't that make it difficult to repay debt?
  - pjc50 11y ago
    Lots of paperwork, I think. Every non-trivial transfer requires approval. Here's how it used to work in the UK until 1979: http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1967/qb67q3245260.pdf http://www.bankofengland.co.uk/archive/Documents/historicpub... Edit: yes, this makes commerce difficult. A finance correspondent I follow on twitter says to expect petrol rationing.

randomname2 11y ago

The BBC should know better than this, using "unnamed sources" to quote a rumour as fact. No decision has been made yet, so this is just misinformation. Expect more of this over the next days.

icebraining 11y ago
Reminds me of Yes, Minister: - Can I attribute it? "Minister speaks out"? - No, no, no. - Then, where did I get the story? I can't say, "Officially announced." - "Government spokesman"? - How about, "Sources close to Minister"? - Hold on, I don't want everybody to know I told you! Couldn't you do, "Speculation is growing in Westminster"? - A bit weak. - "Unofficial spokesman"? - Used that twice this week already! - The Cabinet's leaking like a sieve, isn't it?
peteretep 11y ago
> "unnamed sources" This doesn't mean it was a friend's uncle's brother told them, it means someone in a position to know intentionally leaked it.
- vidarh 11y ago
  But not knowing who leaked it takes away the very important opportunity to judge their motivations for leaking it, which again has a substantial bearing on how believable a leak is.
raesene9 11y ago
Unfortunately this is extremely common in many countries where politicians and civil servants want something out without having it tied to them. If you've been following the greece coverage, there's been lots of documents leaking from various sources on both sides of the negotiations. Last week when the initial greek proposal and the IMF "red-lined" version were in discussion, both were leaked on the day...
- peteretep 11y ago
  > in many countries where politicians and civil servants > want something out without having it tied to them I wonder if there are any democracies where this mechanism isn't used

elmar 11y ago

They have to impose capital restrictions fast... What Would Greek Capital Controls Look Like? http://www.bloomberg.com/news/articles/2015-06-01/how-greek-capital-controls-would-work-if-deadlock-persists-q-a http://www.bloomberg.com/news/articles/2015-06-01/how-greek-...

chkuendig 11y ago
Varoufakis apparently told BBC that the banks might stay closed tomorrow and that capital controls could be imposed. http://twitter.com/suttonnick/status/615112479828348928 http://twitter.com/suttonnick/status/615112479828348928 edit: scratch that. http://twitter.com/yanisvaroufakis/status/615127339102531584 http://twitter.com/yanisvaroufakis/status/615127339102531584
- elmar 11y ago
  Not imposing capital restrictions is suicide, i don't know if Yanis varoufakis is an economical genius a madman or simply amateurish.
  - randomname2 11y ago
    Well, by first saying "capital controls" and then "no capital controls", Varoufakis just kept in line with the diplomatic strategy of Greece, which has been to promptly deny everything it has just said.
  - debtopolis 11y ago
    He has an impossible job - when taxes are not paid, people retire at forty, government jobs pay people even higher salaries because they actually turn up, then any chance of balancing the books is looking like a Greek tragedy.
    - Confusion 11y ago
      Please stop repeating things you don't actually know are true. Greeks work hard and don't retire at 40. Their work ethic is not the problem. Not paying taxes is a problem. The amount of pensions paid is also a problem. Individual Greek people are the victim as much as the lenders whose loans are defaulted on (iincluding me, via my country's contributions)

dataker 11y ago

>after five years of lender-imposed austerity that has increased Greek unemployment That's a very easy target. Probably easier to ignore the high cost of hiring, bureacracy, corruption,...

randomname2 11y ago

ECB statement: ELA to Greek banks maintained at its current level - ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme - ECB will work closely with Bank of Greece to maintain financial stability - Emergency liquidity assistance maintained at Friday’s (26 June 2015) level - Governing Council stands ready to review decision - Governing Council closely monitoring situation and potential implications for monetary policy stance The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union. Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability. Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015). The Governing Council stands ready to reconsider its decision. Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.” Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.” The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate. https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.e...

debtopolis 11y ago
The Greek version of monopoly - they cleaned out the bank early, and everyone loses (game over!)
- randomname2 11y ago
  The ELA freeze was for Sunday. It will be reviewed on a daily basis.

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randomname2 11y ago
While that may be what the statement says, the other part of that statement is that the Greek ELA program has been frozen. As such it is only a matter of time before the entire program is unwound a la Cyprus in March 2013.

the-dude 11y ago

Just now : ELA continued : http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en...

jpmattia 11y ago
The title is not particularly clear. "Continued" means that the ELA is maintained at the current level. Put another way, there will be no further increase in ELA and the Greek banks have used the previous allotment, so their coffers are running dry. It will be a very tough week in Athens.

estefan 11y ago

And now it will continue: http://www.bbc.com/news/world-europe-33304674 http://www.bbc.com/news/world-europe-33304674

sambe 11y ago

Several people are interpreting "stays the same" as good news for Greece and contrary to the article. I interpret it as the opposite: it will not expand further to meet the demand, thus Greek banks will run out of money. I didn't have the impression anyone expected the full amount to be recalled.

randomname2 11y ago
The article was incorrect by stating ELA would be "turned off", as it will merely be frozen, or at least the ECB is saying so. However if the ECB follows through on this, the end result may be the same and it's only a matter of time before the entire ELA bailout is unwound like in Cyprus.
- sambe 11y ago
  The article seems a little confusing/confused but not strictly incorrect. There is no statement that the full amount would be recalled. The value of ELA has effectively become the extensions - the newly-lent money is being withdrawn daily. "Ending" this and refusing increase the limit could be considered the same.

DanielBMarkham 11y ago

They say that newspapers readers and television viewers love a train wreck, a situation where everybody knows very bad things are coming and we all pop the popcorn and watch. It's a sad reflection on human nature, but audience numbers prove it out. But wow, the Grexit is painful even when put into the train wreck category. It's going on and on, and the invective, hate, and hard feelings linger and fester. The amount of misery this has produced seems vastly out of proportion to the incident itself. I wonder if severe, immediate action taken at the beginning of the crisis wouldn't have resulted in something much less painful than this. 25% shrinkage in the economy and then massive bank closings? Good grief. It's becoming reminiscent of post WWI Germany.

zapdrive 11y ago

Its times like these that I seriously consider buying more bitcoins. Capital controls are totally unjust, in a free country. And it can happen in any country. The governments need to get their act together, instead of punishing innocent citizens. Why does a centrally controlled currency even need to exist in the first place?

debtopolis 11y ago
Errrm, moving more transactions outside the general economy wouldn't have helped Greece. Paying taxes might have. Being fiscally responsible might have. Not letting everyone retire at forty might have. Cutting the red tape might have. Not cooking the books might have.
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jacquesm 11y ago

Flagging this, way too much un-informed nonsense in this thread, lots of heat and little or no light.