The central bank continued its freeze on emergency liquidity assistance after Germany issued a humiliating ultimatum to Greece. Photo / AP
The central bank continued its freeze on emergency liquidity assistance after Germany issued a humiliating ultimatum to Greece. Photo / AP
ECB continues its freeze on assistance as Germany issues humiliating ultimatum
The European Central Bank has tightened liquidity conditions for the Greek banking system following the landslide referendum victory for the Athens Government.
The central bank continued its freeze on emergency liquidity assistance after Germany issued a humiliating ultimatum to Greece, warning that the country would be cast adrift and left to go bankrupt unless it agreed to much deeper concessions than anything offered so far.
Sigmar Gabriel, the German vice-chancellor, said the landslide rejection of EU austerity demands in the Greek referendum changed nothing, demanding that the left-wing Syriza Government must accept further belt-tightening without any prospect of debt relief if it wishes to remain in the eurozone.
"The final bankruptcy now appears imminent," he said.
Today, eurozone leaders were meeting in Brussels to discuss if any prospect of a deal can be salvaged from the fallout of the Greek vote.
They are likely to be asked by the ECB whether they would guarantee Greek bonds being used as collateral on emergency aid. Refusal will give the nod for the lifeline to be cut, precipitating a devastating banking collapse. Greece is being kept afloat with 89 billion of ECB emergency funding.
The Greek leaders have been told that they have a deadline of this morning to come up with far-reaching proposals.
The draconian terms followed Greek prime minister Alexis Tsipras' move to rally five political parties behind a national unity declaration.
It called for "substantive talks" on debt relief, an investment blitz to fight mass unemployment and an immediate shot of liquidity for the country's banking system.
The show of unity marked the start of what increasingly looks like a national emergency government, though it may have come too late to prevent an implosion of the banking system and a rapid slide towards "Grexit" over coming days.
Syriza has been demanding a 30 per cent reduction in the debt. These hopes have been dashed.
Greece's four big banks are effectively out of cash, though some ATMs are still allowing Greek savers to extract the maximum 60 a day. The Bank of Greece has further stockpiles of notes but will not be able to release them after the ECB action.
The Germans said they could not write off Greek debts without offering financial assistance to Ireland, Spain and Portugal.
George Osborne, Britain's Chancellor of the Exchequer, urged Angela Merkel, the German Chancellor, to consider backing down to ensure there was not a "disorderly exit" from the eurozone.
He said "the situation risks going from bad to worse" and warned that "Britain will be affected the longer the Greek crisis lasts and the worse it gets". He suggested Britain could fly planeloads of euro notes to Greece to assist stranded tourists.
Oxford man takes reins
New Greek Finance Minister Euclid Tsakalotos. Photo / AP
Greece's new Finance Minister, Euclid Tsakalotos, is an Oxford-educated economist.
He read politics, philosophy and economics at Oxford before completing his PhD in economics there in 1989.
The 55-year-old, who was born in Rotterdam, served as the chief economic spokesman for the Syriza-led Government in Greece.
Unlike his predecessor Yanis Varoufakis, Tsakalotos is no party outsider. He has been a member of Syriza for nearly a decade, serving as an MP in the Greek Parliament since 2012.
Like many of his fellow leftist parliamentarians, Tsakalotos's background is as a jobbing Western academic rather than a career politician, having taught at the universities of Kent and Athens.
Described as the "brains behind Syriza's economic policy", he has authored and co-authored six books, the most recent of which seeks to debunk the causes of Greece's economic turmoil. Far from advocating a "Grexit", Tsakalotos thinks Greece should maintain its membership of the euro.
