Greek banks remain shut despite deal

Governing Council members became more skeptical on providing further aid as confrontation between the anti-austerity government and its creditors worsened, and Greece missed a June 30 payment to the global Monetary Fund.

Until the package can take effect, the ELA is the only available source of financing for Greek banks and, by extension, the sole financial lifeline preventing the Greek economy from sinking.

“The ECB will have to rethink about its Emergency Liquidity Assistance [the bank finance scheme which has kept Greek lenders afloat] and there is strong possibility that they bank may have to address the liquidity issues in the Eurozone as well as its purchase for the past few months have been weaker and pumped less money than expected”. Now that’s gone, there’s a good chance the Fed will do the deed sooner, rather than later – which investors aren’t likely to be happy about.

Only then will the 18 other eurozone leaders start negotiations over a three-year bailout worth up to 86 billion euros (96 billion), Greece’s third rescue programme in five years.

On top of that, billions more would now be needed for the banks to reopen.

As part of Greece’s bailout deal, a 50 billion-euro fund will be established which will be financed by Greek asset sales.

But Oxford Economics chief economist James Nixon said even if lawmakers give the green light, any increase in emergency funding from the European Central Bank would be modest.

Policy makers will probably wait for a two-day meeting in Frankfurt starting Wednesday before deciding whether to raise the limit, euro-area officials said on condition of anonymity.

Nonetheless, this painful solution appears to be a rather long-term plan, compared to the immediate necessity of liquidity that if unanswered might develop into a humanitarian crisis.

Pensioners relying on regular government payments are among those having the toughest time.