Greek banks to go bankrupt Monday if no debt deal — FT

Athens shuttered banks and imposed capital controls at the end of last month, bringing the economy to a virtual standstill and forcing Greeks to queue for hours for cash.

The European Central Bank offered Greece a vote of confidence Thursday in the form of an expanded line of credit to Greek banks.

ECB President Mario Draghi said the bank’s governing council had increased emergency liquidity assistance by 900 million euros for one week at the request of the Bank of Greece.

The ELA to Greek banks increased from zero to nearly 90 billion euros and the Eurosystem has a total exposure to Greece of 130 billion euros, Draghi revealed.

(AP Photo/Thanassis Stavrakis). Greece’s Prime Minister Alexis Tsipras reads his notes during a parliament meeting in Athens, Thursday, July 16, 2015.

Eurozone are set to meet Saturday to recommend a new bailout loan and some emergency bridging finance depending on their evaluation of Greece’s commitment to “reforms”.

He said the four biggest Greek banks are “system-relevant”, code for significant to the worldwide financial system, and that if they fail that would have “severe effects not just for Greece itself… but for the eurozone as a whole”.

Now entering the third week of a bank shutdown, even with a cap of 60 euro on withdrawals, Greek depositors have been pulling an estimated 80 to 100 million euros a day from ATM machines.

Draghi also re-stated that the European Central Bank is willing to use all the stimulus measures at its disposal to prevent market turmoil from destabilizing the economy of the 19 eurozone countries. The processes for parliamentary approvals around the region start immediately, with Germany, the largest creditor, voting on Friday.

Peter Kažmír, who angered some Greeks when he said the country was paying the price for a “Syriza spring”, suggested the absence of support from Syriza meant it was less likely the laws would work in practice. Although, the European Central Bank tried its best that it is not dragged in this arena, but despite this, the outcome is something against their wish.

The Greek parliament has passed a new bailout package by the creditors.

But the Eurogroup, led by the no-nonsense Dutch Finance Minister Jeroen Dijsselbloem, was encouraged by the outcome. His boss, Chancellor Angela Merkel, risks a revolt by her Christian Democratic lawmakers when Germany’s parliament votes. The country’s debt situation is “unsustainable,” and European creditors should either write down a massive amount of Athens’ debt or give Greece a 30-year grace period if they want it to recover and repay, the fund was cited.

In Frankfurt, the ECB said the conditions were “in place” to raise the Emergency Liquidity Assistance (ELA) ceiling despite questions about the solvency of Greece’s banks.

Draghi used the opportunity to emphasize that the European Central Bank always operated under the assumption that Greece would remain a part of the euro.

“We take this criticism very seriously, but I think it is unwarranted and unfounded to say that ECB actions started a bank run in Greece”, Draghi said.

Stocks worldwide rose on strong corporate earnings reports and relief over Greece’s debt issues. But, the officials certainly are in no mood to announce or consider any debt relief and believe that the money can be raised through privatisation.

“A real debt haircut is irreconcilable with membership in a monetary union”, hardline Finance Minister Wolfgang Schaeuble insisted on Deutschlandfunk public radio.