FXStreet (Barcelona) – The Rabobank Team summarizes the key developments and risks ahead for Greece after capital controls were enforced.
Key Quotes
“In the wake of the failure of Greece and its creditors to sign a compromise deal over the weekend, the ECB has agreed only to continue providing emergency lending assistance to Greek banks at Friday’s level of EUR89 bln. The ECB made clear that it stands ready to reconsider its decision but meanwhile the heightened risk that Greece’s banks will run out of liquidity has forced the implication of capital controls.”
“Greek banks will reportedly remain shut until July 7 and there will be a EUR60 daily cap on withdrawals from cash machines, though this will not apply to those using foreign debit or credit cards. It is not clear how long capital controls will remain in place, but bear in mind that in Cyprus controls were not fully lifted for around two years after the 2013 crisis.”
“Amidst the talk that Greek companies will not be able to pay invoices, fears of shortages are rising in the country and queues at petrol stations have been building. It is unknown how long Greece could survive the liquidity shortage before pressure mounts on the Bank of Greece to start issuing an alternative currency.”
(Market News Provided by FXstreet)