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Bank of Greece warns of 'uncontrollable crisis' without bailout deal - live updates Bank of Greece warns of 'uncontrollable crisis' without bailout deal - live updates
(34 minutes later)
11.00am BST11:00
EU official: Cyprus shows capital controls can be imposed
Brussels reporters have been told that Cyprus’s bailout crisis of spring 2013 shows that capital controls can be imposed in the euro area:
As you may recall, Cyprus’s banks were shut for several days after its government accepted a €10.7bn eurozone bailout.
Caps were imposed on how much money could be taken out of banks, or out of the country, and savers with over €100,000 in the banks suffered a hefty haircut on their deposits.
10.47am BST10:47
Werner Faymann’s ‘solidarity visit’ to Greece hasn’t gone down terribly well in Brussels:
"I'm not quite sure what the Austrian chancellor is doing in Athens," says senior #EU official. #Greece
10.40am BST10:40
The chancellor of Austria has now arrived at the Greek PM’s residence, Maximos Mansion, for talks with Alexis Tsipras.
Werner Faymann has already repeated his call for Europe to support Greece, saying:
“For Europe to be stronger, it must show solidarity and support to any country which needs it.”
That follows Faymann’s warning this morning that Greece’s creditors are making some unacceptable demands on the country’s people:
10.39am BST10:39
EU officials are also telling reporters in Brussels that they have already made serious concessions to Greece, since agreeing a four-month bailout extension in February.
That implies they’re not willing to make further compromises to reach a deal.
Senior #EU Official says the Institutions have moved significantly beyond what was agreed on February 20 #Eurogroup #Greece
"Institutions have moved very, very significantly beyond what was agreed by Feb 20," says sr #EU official. "They are extreme movements."
10.29am BST10:2910.29am BST10:29
EU doesn't expect breakthrough tomorrow
The head of the eurozone’s finance ministers has declared that there is still time for an agreement to be reached, to avert the alarming scenario painted by Bank of Greece today.The head of the eurozone’s finance ministers has declared that there is still time for an agreement to be reached, to avert the alarming scenario painted by Bank of Greece today.
Jeroen Dijsselbloem told reporters at the Dutch parliament that:Jeroen Dijsselbloem told reporters at the Dutch parliament that:
“Time is running out but a deal is still possible”.“Time is running out but a deal is still possible”.
Dijsselbloem will chair tomorrow’s Eurogroup meeting, where finance chiefs from across the single currency will discuss the crisis. Dijsselbloem will chair tomorrow’s Eurogroup meeting, where finance chiefs from across the single currency bloc will discuss the crisis.
The Brussels press pack are being briefed now, and hearing that the discussion on Greece could be rather brief.The Brussels press pack are being briefed now, and hearing that the discussion on Greece could be rather brief.
Senior #EU official adds to growing feeling nothing on #Greece will be agreed at Thurs #Eurogroup: "I believe this will be pretty short."Senior #EU official adds to growing feeling nothing on #Greece will be agreed at Thurs #Eurogroup: "I believe this will be pretty short."
Eurogroup looks unpromising/promising depending on your perspective: 'I honestly belive this will be pretty short,' says EU official #greeceEurogroup looks unpromising/promising depending on your perspective: 'I honestly belive this will be pretty short,' says EU official #greece
Updated at 10.30am BST Updated at 10.44am BST
10.05am BST10:0510.05am BST10:05
Greek Central Bank pleads for deal to avoid GrexitGreek Central Bank pleads for deal to avoid Grexit
Greece’s central bank has issued an urgent plea to both sides to hammer out a deal, warning that the country could be forced out of the European Union.Greece’s central bank has issued an urgent plea to both sides to hammer out a deal, warning that the country could be forced out of the European Union.
In a new report to the Greek parliament, the Bank of Greece said an agreement was now a “historic imperative”. Otherwise, the country risks being relegated to just “a poor country in the European South”.In a new report to the Greek parliament, the Bank of Greece said an agreement was now a “historic imperative”. Otherwise, the country risks being relegated to just “a poor country in the European South”.
It’s a chilling warning of the risks that Greece currently faces.It’s a chilling warning of the risks that Greece currently faces.
The Bank says:The Bank says:
Failure to reach an agreement would....mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union.Failure to reach an agreement would....mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union.
A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.
And the impact on the Greek people would be desperately severe:And the impact on the Greek people would be desperately severe:
All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership.All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership.
From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.
For that reason, the Bank said, the risk of a “credit event” (ie, a default), must be removed “once and for all”.For that reason, the Bank said, the risk of a “credit event” (ie, a default), must be removed “once and for all”.
It also reported that around €30bn has already left Greek bank accounts since October, as the “dragging-on of negotiations” hit confidence.It also reported that around €30bn has already left Greek bank accounts since October, as the “dragging-on of negotiations” hit confidence.
That has:That has:
...largely taken the form of cash withdrawals and hoarding, while flight of capital has also been recorded....largely taken the form of cash withdrawals and hoarding, while flight of capital has also been recorded.
#Greece | Deposits down to '04 levels...Comical Ali says still no bank runs here pic.twitter.com/IXl2y3bHDy#Greece | Deposits down to '04 levels...Comical Ali says still no bank runs here pic.twitter.com/IXl2y3bHDy
And if all that wasn’t bad enough, the Bank also predicted that the current recession will probably get even worse:And if all that wasn’t bad enough, the Bank also predicted that the current recession will probably get even worse:
The deterioration of economic sentiment indicators and financing conditions in the private sector suggest that the slowdown of the economy is likely to accelerate in the second quarter of 2015, putting the economy at risk for a renewed bout of recession.The deterioration of economic sentiment indicators and financing conditions in the private sector suggest that the slowdown of the economy is likely to accelerate in the second quarter of 2015, putting the economy at risk for a renewed bout of recession.
9.40am BST09:409.40am BST09:40
UK launches contingency planning for GrexitUK launches contingency planning for Grexit
The British government has embarked on contingency planning to prepare for the “serious economic risks” posed by a Greek default and a possible exit from the euro, the chancellor, George Osborne, has confirmed.The British government has embarked on contingency planning to prepare for the “serious economic risks” posed by a Greek default and a possible exit from the euro, the chancellor, George Osborne, has confirmed.
My colleague Nick Watt reports:My colleague Nick Watt reports:
As David Cameron prepares to discuss the Greek crisis with the prime ministers of Italy and Luxembourg on Wednesday, the chancellor said the UK government was taking “all steps” to protect Britain.As David Cameron prepares to discuss the Greek crisis with the prime ministers of Italy and Luxembourg on Wednesday, the chancellor said the UK government was taking “all steps” to protect Britain.
Whitehall officials, who held contingency planning meetings on the implications of a possible Greek exit from the euro in February, have stepped up their preparations in recent weeks amid fears that Greece could be on the verge of a debt default...Whitehall officials, who held contingency planning meetings on the implications of a possible Greek exit from the euro in February, have stepped up their preparations in recent weeks amid fears that Greece could be on the verge of a debt default...
Full story:Full story:
Related: UK starts planning for 'serious economic risks' of Greek exit from euroRelated: UK starts planning for 'serious economic risks' of Greek exit from euro
9.35am BST09:359.35am BST09:35
My colleague Jon Henley is in Athens, and found plenty of evidence that Greeks have been stashing funds away in case their banking sector collapses:My colleague Jon Henley is in Athens, and found plenty of evidence that Greeks have been stashing funds away in case their banking sector collapses:
He writes:He writes:
“Everybody’s doing it,” said Joanna Christofosaki, in front of a Eurobank cash dispenser in the leafy Athens neighbourhood of Kolonaki.“Everybody’s doing it,” said Joanna Christofosaki, in front of a Eurobank cash dispenser in the leafy Athens neighbourhood of Kolonaki.
“Our friends have all done it. Nobody wants their money to be worthless tomorrow. Nobody wants to be unable to get at it.”“Our friends have all done it. Nobody wants their money to be worthless tomorrow. Nobody wants to be unable to get at it.”
A researcher in the archaeology department at the Academy of Athens, Christofosaki said she knew plenty of people who had “€10,000 somewhere at home” and plenty of others who chose to keep their stash at the office. Was she among them?A researcher in the archaeology department at the Academy of Athens, Christofosaki said she knew plenty of people who had “€10,000 somewhere at home” and plenty of others who chose to keep their stash at the office. Was she among them?
“If I was, I certainly wouldn’t tell you.”“If I was, I certainly wouldn’t tell you.”
“People are very concerned,” said the owner of a small company who asked not to be named.“People are very concerned,” said the owner of a small company who asked not to be named.
“I think those who could, have already transferred some money abroad. And lots of others have taken out a few thousand, enough to see them through any immediate crisis. I have.”“I think those who could, have already transferred some money abroad. And lots of others have taken out a few thousand, enough to see them through any immediate crisis. I have.”
Sofia, who runs a boutique in one of Athens’ wealthier suburbs, said she and her husband had €15,000 in a safe in the garage, “just to be sure we’re not caught out.”Sofia, who runs a boutique in one of Athens’ wealthier suburbs, said she and her husband had €15,000 in a safe in the garage, “just to be sure we’re not caught out.”
Elsewhere, an anonymous car concessionaire confessed to “getting into gold a little bit”.Elsewhere, an anonymous car concessionaire confessed to “getting into gold a little bit”.
“Not much. But it’s safe, isn’t it? That’s what they say.”“Not much. But it’s safe, isn’t it? That’s what they say.”
Here’s Jon’s full report:Here’s Jon’s full report:
Related: 'It’s going to be bad, whatever happens': Greece on edge as eurozone exit loomsRelated: 'It’s going to be bad, whatever happens': Greece on edge as eurozone exit looms
Updated at 9.36am BSTUpdated at 9.36am BST
9.29am BST09:299.29am BST09:29
Austria’s finance minister Hans Jörg Schelling may not be as supportive towards Greece as chancellor Faymann, suggests our Europe editor Ian Traynor.Austria’s finance minister Hans Jörg Schelling may not be as supportive towards Greece as chancellor Faymann, suggests our Europe editor Ian Traynor.
#grexit doubt whether #schelling will echo #faymann in lux tomorrow#grexit doubt whether #schelling will echo #faymann in lux tomorrow
Two months ago, Schelling said he was “somewhat irritated” by Greece’s failure to submit acceptable reforms. He could be positively exasperated by now.Two months ago, Schelling said he was “somewhat irritated” by Greece’s failure to submit acceptable reforms. He could be positively exasperated by now.
9.18am BST09:189.18am BST09:18
Freelance journalist Omaira Gill reports that the Greek people are feeling increasingly worried by the crisis:Freelance journalist Omaira Gill reports that the Greek people are feeling increasingly worried by the crisis:
Mood on the ground: public is spooked. #troika #greece #austerity #euro #eurocrisis #syrizaMood on the ground: public is spooked. #troika #greece #austerity #euro #eurocrisis #syriza
9.09am BST09:099.09am BST09:09
Over in Athens, demonstrators have occupied the offices of the European Commission in an anti-austerity protest.Over in Athens, demonstrators have occupied the offices of the European Commission in an anti-austerity protest.
Enikos has more details:Enikos has more details:
The demonstrators are members of the trade union affiliated to Syriza, called META.The demonstrators are members of the trade union affiliated to Syriza, called META.
They have raised a banner saying: “The people cannot be blackmailed – The country isn’t for sale”.They have raised a banner saying: “The people cannot be blackmailed – The country isn’t for sale”.
8.38am BST08:388.38am BST08:38
Europe should be able to handle the “contagion risk” if Greece were to default on its debts and crash out of the eurozone.Europe should be able to handle the “contagion risk” if Greece were to default on its debts and crash out of the eurozone.
That’s according to Moritz Kraemer, managing director of sovereign ratings at S&P.That’s according to Moritz Kraemer, managing director of sovereign ratings at S&P.
Speaking on Bloomberg TV this morning, Kraemer said that most investors don’t think that “Grexit” is a likely scenario. But, if they are wrong, Greece is relatively well insulated from the rest of the financial world:Speaking on Bloomberg TV this morning, Kraemer said that most investors don’t think that “Grexit” is a likely scenario. But, if they are wrong, Greece is relatively well insulated from the rest of the financial world:
If you really look at the contagion risks - the direct links through common creditors, it’s not really that important any more.If you really look at the contagion risks - the direct links through common creditors, it’s not really that important any more.
Europe also has “much more powerful firewalls” than in 2012 - including a new bailout facility (the ESM) and Mario Draghi’s new bond-buying vehicle (OMT).Europe also has “much more powerful firewalls” than in 2012 - including a new bailout facility (the ESM) and Mario Draghi’s new bond-buying vehicle (OMT).
There is really a much bigger, more powerful toolbox than last time.There is really a much bigger, more powerful toolbox than last time.
That’s all true....but it’s worth noting that eurozone government bond yields (or interest rates) have been rising in recent weeks. That suggests they are being seen as riskier....That’s all true....but it’s worth noting that eurozone government bond yields (or interest rates) have been rising in recent weeks. That suggests they are being seen as riskier....
S&P's Kraemer says Greek contagion manageable in default case b/c of fire walls and ECB QE. (BBG) pic.twitter.com/pAlhONjMhYS&P's Kraemer says Greek contagion manageable in default case b/c of fire walls and ECB QE. (BBG) pic.twitter.com/pAlhONjMhY
Kraemer also confirmed that Greece would not be in default if missed its €1.6bn repayment to the IMF on 30 June.Kraemer also confirmed that Greece would not be in default if missed its €1.6bn repayment to the IMF on 30 June.
8.19am BST08:198.19am BST08:19
Here’s a couple more key quotes from the Austrian chancellor this morning, ahead of his meeting with Alexis Tsipras at noon local time (10am BST):Here’s a couple more key quotes from the Austrian chancellor this morning, ahead of his meeting with Alexis Tsipras at noon local time (10am BST):
#Austria Chancellor Faymann: Institutions must help #Greece deal with poverty; #EU will show solidarity if Greece does homework#Austria Chancellor Faymann: Institutions must help #Greece deal with poverty; #EU will show solidarity if Greece does homework
#Austria Chancellor Faymann: Some proposals for #Greece were 'not Ok'; Greece must improve tax collection, rule of law#Austria Chancellor Faymann: Some proposals for #Greece were 'not Ok'; Greece must improve tax collection, rule of law
8.15am BST08:158.15am BST08:15
Europe’s stock markets are creeping higher this morning, as traders watch events in Greece nervously.Europe’s stock markets are creeping higher this morning, as traders watch events in Greece nervously.
The FTSE 100 has gained 20 points, or 0.3%, in the first few minutes of trading, having been driven to a four-month low earlier this week.The FTSE 100 has gained 20 points, or 0.3%, in the first few minutes of trading, having been driven to a four-month low earlier this week.
The German and Spanish markets are also up just 0.2%, while the euro is a little higher against the US dollar at $1.127.The German and Spanish markets are also up just 0.2%, while the euro is a little higher against the US dollar at $1.127.
So, no panic. But the Greek saga is still hitting sentiment in the City.So, no panic. But the Greek saga is still hitting sentiment in the City.
As Mike van Dulken of Accendo Markets puts it:As Mike van Dulken of Accendo Markets puts it:
The nation’s fate is perilously in the balance as failure by Greece and its Creditors to cede ground continues, and a mud-slinging blame game by all and sundry for the lack of progress gathers pace. The clock ticks ever closer to default.The nation’s fate is perilously in the balance as failure by Greece and its Creditors to cede ground continues, and a mud-slinging blame game by all and sundry for the lack of progress gathers pace. The clock ticks ever closer to default.
8.05am BST08:058.05am BST08:05
Austrian chancellor: I stand by the Greek peopleAustrian chancellor: I stand by the Greek people
The Austrian Chancellor has issued a strong declaration of solidarity with Greece, hours before meeting Greek prime minister Alexis Tsipras in Athens later today.The Austrian Chancellor has issued a strong declaration of solidarity with Greece, hours before meeting Greek prime minister Alexis Tsipras in Athens later today.
Werner Faymann told Austrian broadcaster ORF that Greece should be given more support, given the extent of the damage suffered by its people since the debt crisis began.Werner Faymann told Austrian broadcaster ORF that Greece should be given more support, given the extent of the damage suffered by its people since the debt crisis began.
Faymann criticised some of the measures which Greece’s lenders - the IMF, ECB and EC - are demanding, saying:Faymann criticised some of the measures which Greece’s lenders - the IMF, ECB and EC - are demanding, saying:
“I know there were a number of proposals, also from the institutions, that I also don’t find in order.”“I know there were a number of proposals, also from the institutions, that I also don’t find in order.”
“High joblessness, 30-40 percent (with) no health insurance and then raising VAT on medicines. People in this difficult situation cannot understand that.”“High joblessness, 30-40 percent (with) no health insurance and then raising VAT on medicines. People in this difficult situation cannot understand that.”
Relations between Greece and her creditors are increasingly fraught, as Athens resists pressure to cut its pensions bill by 1% of GDP, and to raise sales taxes.Relations between Greece and her creditors are increasingly fraught, as Athens resists pressure to cut its pensions bill by 1% of GDP, and to raise sales taxes.
Last night, EC president Jean-Claude Juncker accused the Greek government of misleading the public over exactly what is being demanded.Last night, EC president Jean-Claude Juncker accused the Greek government of misleading the public over exactly what is being demanded.
Faymann’s intervention, and his visit to Greece today, are a last-ditch attempt to end the standoff with international creditors before eurozone finance ministers meet tomorrow.Faymann’s intervention, and his visit to Greece today, are a last-ditch attempt to end the standoff with international creditors before eurozone finance ministers meet tomorrow.
He declared:He declared:
“I stand on the side of the Greek people who in this difficult position are being proposed more things detrimental to society.”“I stand on the side of the Greek people who in this difficult position are being proposed more things detrimental to society.”
Faymann did also emphasise that Greece must meet its commitments under its current bailout plan, citing the need to fight fraud and a fair taxation system where everyone pays their fair share.Faymann did also emphasise that Greece must meet its commitments under its current bailout plan, citing the need to fight fraud and a fair taxation system where everyone pays their fair share.
But the priority is to “avoid a catastrophe”.But the priority is to “avoid a catastrophe”.
And asked whether Greece’s leaders can deliver a compromise in time, he said:And asked whether Greece’s leaders can deliver a compromise in time, he said:
“I assume that someone who is elected lives up to his responsibility.”“I assume that someone who is elected lives up to his responsibility.”
(thanks to Reuters for the quotes)(thanks to Reuters for the quotes)
Updated at 8.07am BSTUpdated at 8.07am BST
7.54am BST07:547.54am BST07:54
Introduction: Will ECB continue supporting Greek banks?Introduction: Will ECB continue supporting Greek banks?
Good morning, and welcome to our rolling coverage of the Greek bailout crisis.Good morning, and welcome to our rolling coverage of the Greek bailout crisis.
Athens now has just 13 days to reach a deal with its creditors before its bailout programme expires, and a matter of hours until finance ministers meet to discuss the situation in Luxembourg on Thursday.Athens now has just 13 days to reach a deal with its creditors before its bailout programme expires, and a matter of hours until finance ministers meet to discuss the situation in Luxembourg on Thursday.
The prospects of a deal to end the deadlock that is spreading worry through the eurozone and beyond do not look great.The prospects of a deal to end the deadlock that is spreading worry through the eurozone and beyond do not look great.
With both sides deadlocked, Austrian chancellor Werner Faymann is heading to Athens this morning for talks with prime minister Alexis Tsipras at noon local time, followed by statements to the press.With both sides deadlocked, Austrian chancellor Werner Faymann is heading to Athens this morning for talks with prime minister Alexis Tsipras at noon local time, followed by statements to the press.
Faymann will be pushing Tsipras to reach a deal, to head off the growing risks that Greece fails to repay €1.6bn to the IMF on 30 June.Faymann will be pushing Tsipras to reach a deal, to head off the growing risks that Greece fails to repay €1.6bn to the IMF on 30 June.
That danger prompted US Treasury secretary Jack Lew to phone Tsipras last night and push for a “pragmatic compromise”, just hours after the Greek PM accused the IMF of “criminal responsibility” for the crisis.That danger prompted US Treasury secretary Jack Lew to phone Tsipras last night and push for a “pragmatic compromise”, just hours after the Greek PM accused the IMF of “criminal responsibility” for the crisis.
Guardian front page, Wednesday 17 June 2015: Greece accuses 'criminal' creditors as default nears pic.twitter.com/kvxJC9VrCUGuardian front page, Wednesday 17 June 2015: Greece accuses 'criminal' creditors as default nears pic.twitter.com/kvxJC9VrCU
The unfolding crisis piles more pressure on the European Central Bank, which must decide today whether to keep providing emergency liquidity to the Greek banking sector.The unfolding crisis piles more pressure on the European Central Bank, which must decide today whether to keep providing emergency liquidity to the Greek banking sector.
The ECB has already stumped up around €82bn of support, to help banks keep afloat despite the steady loss of deposits as alarmed savers withdraw their funds.The ECB has already stumped up around €82bn of support, to help banks keep afloat despite the steady loss of deposits as alarmed savers withdraw their funds.
The ECB is unlikely to pull the plug on ELA today; such a move would be far too political for the central bank at this stage in the crisis. It could agree to raise it by a few billion euros -- a big increase would suggest that the outflow of deposits has accelerated.The ECB is unlikely to pull the plug on ELA today; such a move would be far too political for the central bank at this stage in the crisis. It could agree to raise it by a few billion euros -- a big increase would suggest that the outflow of deposits has accelerated.
We’ll be watching out for comments from Greek finance minister Yanis Varoufakis, who is meeting the Secretary-General of the OECD, Angel Gurria, in Paris this afternoon.We’ll be watching out for comments from Greek finance minister Yanis Varoufakis, who is meeting the Secretary-General of the OECD, Angel Gurria, in Paris this afternoon.
Varoufakis to meet OECD's Gurria in Paris - http://t.co/H0TRU0es3q pic.twitter.com/wOk4SsZo0MVaroufakis to meet OECD's Gurria in Paris - http://t.co/H0TRU0es3q pic.twitter.com/wOk4SsZo0M
And two of most powerful figures in world finance, IMF chief Christine Lagarde and Federal Reserve chair Janet Yellen, will both be speaking tonight; might they say something about the Greek crisis?And two of most powerful figures in world finance, IMF chief Christine Lagarde and Federal Reserve chair Janet Yellen, will both be speaking tonight; might they say something about the Greek crisis?
Morning Note: 1. ECB ELA decision. 2. Lagarde speaks 7:30 UK time. 3. Yellen speaks 7:30 UK time = bad scheduling pic.twitter.com/7wWexgtrvpMorning Note: 1. ECB ELA decision. 2. Lagarde speaks 7:30 UK time. 3. Yellen speaks 7:30 UK time = bad scheduling pic.twitter.com/7wWexgtrvp
I’ll be tracking all the main events through the day....I’ll be tracking all the main events through the day....