“In The End Capital Controls Will Probably Have To Be Imposed” – Eurogroup Official

With less than 24 hours until the ECB’s meeting at which Mario Draghi and company are set to decide if i) they will increase the current Greek emergency liquidity allotment from €65 billion as a result of the ongoing bank deposit run or ii) reduce – or even outright cancel it – to send Tsipras a message that the time for negotiations is over, Europe is no longer playing Mr. nice guy. In fact, judging by the latest report in Reuters, which may well be nothing but another planted trial balloon (in the aftermath of today’s latest Telegraph revelations one should read everything presented in the media, here certainly included, with a cape-size ship full of salt) Greece can kiss goodbye not only any a loan extension without a bailout “programme” resumption, but also any hope that tomorrow’s its ELA will be increased. 

The reason: ze Germans.

The European Central Bank faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said, increasing pressure on Athens to sign up to an extended aid-for-reform programme…. the ECB’s policymaking governing council will review on Wednesday how far the country may support its weak banks, which face rising deposit outflows.  While the ECB is unlikely to lower the ceiling on emergency lending assistance (ELA) by the Greek central bank, a refusal to increase it would nonetheless be bad news for Greek banks, which are close to using up the full 65 billion euros granted so far.

Bundesbank chief Jens Weidmann, who has warned against the misuse of the emergency funding to indirectly finance the Greek state, is set to stick to this stance at the ECB meeting, the sources said. Some other governors have similar reservations.

Which means that the standoff will may well continue past midnight tomorrow. Now, in the worst case scenario, should the ECB yank all Greek ELA, then all bets are off, and on Wednesday it is unlikely that any banks will reopen in Greece, which incidentally would likely lead to an immediate compromise by the new PM and FinMin, unless of course they are prepared for this contingency and reveal a new €100 billion or so loan from the BRIC bank, compliments of Vladimir Putin.