Already on Saturday pictures of anxious savers queuing outside banks to withdraw money were circulating. A slow-motion bank run that had already drained €35 billion ($39 billion) of household and corporate deposits out of the Greek banking system between November 2014 and May 2015 threatens to get out of control. Greek banks have been able to cope with the haemorrhage of deposits only thanks to massive borrowing from the Bank of Greece, permitted by the European Central Bank (ECB) in Frankfurt. The ECB is now likely to call time on this and to prevent further increases in this “emergency liquidity assistance” (ELA). That will in turn force limits on cash withdrawals along with capital controls to prevent money leaving the country… Even if the ECB stays its hand this weekend, it will be forced to act early next week. Without a deal this weekend, the cash-strapped Greek government will be unable to repay the IMF €1.5 billion that is due at the end of this month.
The climax to 10 days of fraught bargaining in Brussels and Luxembourg was the decision by Alexis Tsipras, the Greek prime minister, to call a plebiscite on the terms of Greece’s bailout, stunning the other eurozone governments. “I am very negatively surprised,” said Jeroen Dijsselbloem, the Dutch chair of the committee of eurozone finance ministers. “The situation [in Greece] will deteriorate very rapidly … How the Greek government will survive, I do not know.”