The European Central Bank has increased the limit of emergency funds available to Greek lenders. The move comes ahead of a Monday deadline for Greece to submit reform proposals to the ECB in order to continue receiving aid. It is not yet clear whether the ECB move was motivated by any immediate capital flight risks or as a negotiating/signalling tool ahead of Greece’s proposal. The prospect of a “Grexit” seems mildly less frightening than it did a couple months ago, now that Germany and the rest of the EU have had time to take certain precautionary measures. Germany – with its stern approach – seems to be using Greece to signal to other European countries like France that the EU is not a “blank check” organization. Altogether, Monday seems likely only buy us a temporary solution, as the struggling Mediterranean tries its best to stall any austerity measures.
http://www.bloomberg.com/news/articles/2015-03-25/ecb-said-to-raise-cap-on-greek-banks-to-over-71-billion-euros
4 Comments
I am surprised that the ECB would raise the cap on emergency funds for Greece considering the recent actions by Greece’s new government concerning its already outstanding debt. It should be interesting to see the effect this move has on the ongoing negotiations.
It seems to me that this may be a negotiating and/or signaling tool ahead of Greece’s proposal. As reform proposals are due on Monday the ECB as essentially pledged to help Greece, at least in the short term.
I am more uncertain about whether Greece will be able to draft up a decent (and credible) reform proposal by Monday. I do not remember what source it was (probably NY Times since its app is on my phone), but I read an article sometime this week how Greek prime minister demanded Germany to pay WWII reparation for inhumane war crime by Nazi Germany which seems a little out of nowhere to me. Now that Germany is also mired in the recent plane crash, Merkel may have too many issues to juggle right now…
My sense is that Europe has used the opportunity to prepare for “Grexit” by burying their heads deeper in the sand. Can you possibly make a value case that with half of all young people unemployed, Greece should in the name of the welfare of its citizenry engage in additional austerity — and then maybe still have to quit the euro????? Greece should have pulled the plug long ago. If Germany and France are really serious about the Euro and the European Union, it’s time they stop trying to do it on the cheap and on the backs of the smaller & poorer members, and pay up.
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