Greece's banks are set to open today after being closed for a week. The problem is they have no money after the European Central Bank (ECB) cut off the Emergency Liquidity Assistance (ELA) lifeline last week.
To open with any semblance of normality, Greece's banks desperately need at least 6 billion euros (S$8.9 billion). The ECB met yesterday and had not made any announcement as of press time.
ANZ's head of global economics Brian Martin told news.com.au: "If the ECB does not extend additional ELA, it is very difficult to see how the banks can open on Tuesday as planned, and the economic crisis will intensify."
So Greece then faces two options, a Washington Post report argued.
The first is to take money from the depositors and the second is to simply print more of it. The second is the more likely option, but it cannot print more while it is using the euro as it is a currency used by euro zone countries.
So Greece will most likely go back to its old currency, the drachma, to supply its banks.
This will mean Athens leaving the euro zone. But by printing more money, it will devalue the drachma and risk causing economic hardship.
DEAL DONE... OR UNDONE
Greek Prime Minister Alexis Tsipras had a deal on the table days before the referendum, reported the BBC.
It was not too far off from what its creditors wanted - on the surface.
He wanted another full bailout, not the final portion of the original bailout that was due to his country.
The amount he is asking for is about 29 billion euros - four times the size of final portion the country was getting.
When Mr Tsipras heads to meetings with European heads, he will also be using an IMF report, released just three days before the referendum, which said Greece needs significant debt relief, as well as closer to 50 billion euros over three years, reported the BBC.
But the creditors probably won't buckle. Entrepreneur and columnist Hugo Dixon said in a Reuters blog: "They would prefer to keep Greece in the euro (zone) if possible - for both financial and geopolitical reasons. But many of the leaders are fed up with Athens' rhetoric and negotiating style.
"The day before the referendum, for example, then Finance Minister Yanis Varoufakis accused the creditors of terrorism.
Parliamentarians and electorates in some countries, such as Germany, are hostile to the idea of granting more soft loans to Greece."
There is another shock that is coming. On July 20, Greece is due to pay the ECB 3.5 billion euros.
If it misses that payment, the central bank will probably conclude that the state is broke and, because of the way the country's banks are connected to the government, that they are insolvent too, reported Reuters.
Said Mr Dixon: "A bust bank is a more serious matter than a bank holiday. People would be unable to use their credit cards or make electronic transfers.
"Tourists, who are currently unaffected by the capital controls, would no longer be able to extract cash. That would hardly be a good advertisement for Greece's most important industry. The economy would go into a tailspin."
This article was first published on July 7, 2015.
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