All banks in Greece, which have been closed since June 29, will open on Monday (July 20), Greek media said Thursday.
To compound the problem, numerous banks’ valuable assets are tied up as security for the roughly 90 billion euros of emergency central-bank funding that has been keeping them afloat. European Union countries are awaited to approve the loan on Friday.
The country has debts of €320bn and is seeking its third global bailout. Unless the amount is paid, the International Monetary Fund would refuse to make loans to Greece.
“From Monday, the services offered will be widened”.
“The Eurogroup welcomes the adoption by the Greek Parliament of all the commitments specified in the Euro Summit statement” reached in marathon talks last weekend, the eurozone’s finance ministers said. “I think we should focus on this”.
A new Greek bailout will take about a month to complete but the country’s financial state is dire.
Greeks queue outside an ATM in late June.
Greece has missed two payments totaling about EUR2 billion that were due to the global Monetary Fund in recent weeks. In other words it needs to spend the €7bn nearly as soon as it gets it.
Mark Harbers of the Liberal Party deflected criticism of the broken pledge by telling lawmakers in a debate Thursday that he can only give an opinion on the deal once all details have been pinned down by eurozone negotiators and Greece.
German Finance Minister Wolfgang Schaeuble has mentioned a possible temporary exit from the euro for Greece to sort out its problems.
It is pretty unprecedented language. For the second time this week, he suggested that Greece might be better off leaving the euro, which would allow its creditors to write down its debt.
ECB President Mario Draghi told a news conference that emergency funding – ELA – to Greek banks was being raised by €900m over one week. “Things have changed now”, he said. The ECB will also be asked to explain the bridge financing mechanism for Greece which is being prepared by the EU officials and if there is a possibility of EFSM ( European financial system mechanism) coming back to life.
It was agreed in a conference call on Thursday to tap the EU’s EFSM emergency fund.
Sky’s Economics Editor Ed Conway said that any contribution to the loan by Britain would be protected.
Horst Seehofer, the centre-right prime minister of Bavaria, said the Bundestag should vote for starting formal talks with the Tsipras government on a bailout.
As part of a deal to secure new funding, Athens had to surrender much autonomy over its economy and this will include handing over more power to European institutions to decide the fate of its sick banks.
Thirty-two of his own Syriza MPs voted against the plan, including the former finance minister Yanis Varoufakis, who has likened the bailout deal to the 1919 Treaty of Versailles that imposed crushing debts on Germany.
He is expected to reshuffle his cabinet in the near future. Euro leaders’ insistence that Europe’s new resolution directive enabling senior creditor haircuts be passed in Greece by July 22 shows that bail-ins are on the table.
He also said the bailout deal, for which negotiations will start if Athens passes sweeping reform laws in parliament, had averted any prospect of a levy on bank deposits.
The ECB’s announcement that Greek banks would receive an additional €900-million ($1.3-billion) in emergency liquidity assistance (ELA) loans over one week came as a surprise.