European sovereign debt crisis

Two days after an agreement paving the way for a new support program for Greece, the European Commission revealed plans on Wednesday to help Greece maximize its use of EU funds. As mandated by the Euro Summit of July 12-13, this will help mobilise more than €35 billion up to 2020 to support the Greek economy, provided that the conditions agreed upon by the Euro Summit will be met.

German Finance Minister Wolfgang Schaeuble still thinks that a temporary exit of Greece from the eurozone would perhaps be a better option for the country.

Schaeuble said this in an interview for Deutschlandfunk radio on Thursday, daily Kathimerini informs.

The European Financial Stability Facility (EFSF) has reportedly sent Greece’s General Accounting Office a letter stating that it is within its rights to immediately demand repayment of the loans given to the country, as part of the second bailout package.

The decision was reportedly sent to the Greek side by EU Commissioner Pierre Moscovici.

The four largest Greek banks have failed and would also have defaulted had capital controls not been imposed at the outset of the week, due to deposit withdrawals and the ECB’s decision not to raise the Bank of Greece’s (BG) Emergency Liquidity Assistance (ELA) ceiling, says Fitch Ratings.

Projections for a “haircut” of Greek bank accounts vary between 27 to 55 percent if the ECB requests a return of roughly 120 billion euros funneled to Greek systemic banks as liquidity.

Such a nightmare scenario could be one of the repercussions of a possible delay in any new bailout agreement, regardless of a “yes” or “no” vote in Sunday referendum.

“It was the best of times, it was the worst of times,” wrote Charles Dickens in “A Tale of Two Cities” and this quote may well apply to Athens right now, as two worlds are on a collision course:

Yes vs. No, Greece vs. Creditors but NOT Drachma vs. Euro (though it could be!) 

Eurozone Finance Ministers have turned down a request by Greece to continue its bailout program beyong June 30.

Tensions between Greece and the rest of the Eurozone soared after PM Alexis Tsipras called in a referendum on July 5 so that Greeks have their final say on the international lenders' latest bailout proposal.

Under mounting pressure, Greece presented its new reform proposals to its Eurozone partners on Monday aimed at the release of 7.2 bn euros worth of bailout funds benchmarked for Greece. An agreement is needed to stave off a Greek default.

Eurozone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated and government revenue slumped as Athens and its international creditors remain deadlocked over a debt deal.

By Jan Strupczewski

Greece has already received debt relief from its eurozone creditors equal to half of its 2013 GDP in net present value terms, the eurozone bailout fund said in its annual report, noting Greek public debt was now high but sustainable.