The current situation in Greece is both difficult and crucial for the future of the Eurozone, some experts say. They predict that Greek depositors may well be deprived of a certain part of their savings kept in local banks, Market Leader reports.
More and more internet sources (including whotrades.com) publish multiples predictions regarding the Greek scenario. In particular, they say that Greece is forced to keep their banks closed until Friday or even Monday in order to avoid endless lines of depositors trying to withdraw their savings. It is pretty obvious that under such circumstances the Greeks will rush to local banks to take their savings amid uncertainty.
At this point, local ATMs cap the daily withdrawal to 60 EUR. Still, there are 2,5 million retired people in Greece. They may well spend the entire day in the line. If to consider the fact that Greek banks has only 500 million EUR of cash left, it is not difficult to calculate that the banks may run out of cash in 24 hours if everyone rushes to withdraw the money.
Now it is up to the IMF, ECB and European nations to sponsor Greece to let it avoid a total economic and financial crash. Over the last 5 years, the Greek GDP has shrunk by 25%. At the same time, the rate of unemployment among the Greek youth is now 50% as high as it used to be 5 years ago. The Greek government insists that the current conditions put forward by the troika of lenders are unacceptable and humiliating. They demand a delay for 6 months in debt payments in order to win some time to wok out other steps less painful for the Greek people.
Well, this scenario didn’t come up as a surprise. The ruling party promised to reduce to nothing the austerity policy imposed by the troika while Greece is still a Eurozone member. Well, the current state of affairs is unprecedented for the Eurozone. We are talking about a failed multi-billion financial aid coupled with the first default of a developed European economy in the IMF history.
If the so-called Grexit scenario does manifest itself, this is also going to be an unprecedented event. Moreover, there is still no official procedure of quitting the currency union. If the European leaders fail to work out Plan B t save the day, the situation may escalate and result in unpleasant consequences for the entire Eurozone.
There is no doubt that the Greek banking system will be a sorry sight when it reopens its doors. The amount of bad debts will grow dramatically. Anyway, the Greek authorities will have to deprive the depositors of a certain share of their savings the way it was done in Cyprus .
If Greece eventually quits the Eurozone and returns to the Drakhma, plain folks will not be able to avoid a rapid decrease in heir incomes and standards of living. If this is the case, Greece will see inflation, devaluation and less income coming from the local tourist industry. In other words, if the worst-case scenario manifests itself, the Greeks won’t see a happy living within the next decade.
Apparently, European markets are getting ready for a Greek exit from the Eurozone. The ECB’s asset purchase program cut the bond yields, thereby reducing the likelihood of a default in other debt-ridden European economies amid panic.
At the same time, the current market situation confirms that the overall market panic over Greece is going down. Probably, the market participants recollect Mario Draghi’s promise to do everything required to back the common European currency.
Meanwhile, Masterforx-V Academy reports that the common European currency managed to recover a bit against the U.S. Dollar during today’s European trading session.
