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Pressure on Greece continues as central bank says no credit increase

Pressure on Greece continues as central bank says no credit increase

The European Central Bank said Sunday it won’t increase the level of emergency credit to Greek banks, increasing the turmoil over the Greece’s bailout negotiations and financial future. The move came a day after the Greek Parliament voted to hold a referendum July 5 on whether to accept a bailout deal offered by the country’s international creditors — to continue financial assistance in exchange for austere fiscal reforms.635649662168928422-AP-GREECE-LIFE-IN-THE-HOT-SEAT-71377554

Prime Minister Alexis Tsipras proposed the surprise referendum over the weekend and is urging people to reject the creditors’ terms. Tsipras called a Cabinet meeting Sunday night. People in Greece lined up at ATMs all weekend to withdraw their money, fearing limits could be placed on withdrawals or that the banks will close.

Without an increase in emergency credit, Greece’s four major banks could soon run out of cash, according to the Associated Press. It’s also unclear whether Greece will be able to repay $1.8 billion to the International Monetary Fund, which is due Tuesday. Eurozone financial ministers on Saturday rejected Greece’s request for a one-month extension of that deadline. If Greece defaults on its loans, there are fears it could be forced out of the 19-nation euro-currency bloc. And under a worse-case scenario, that exit from the eurozone could jeopardize Greece’s membership in the 28-nation European Union.

Tsipras said Sunday that the Bank of Greece has recommended that banks remain closed and restrictions be imposed on transactions, according to the Associated Press. Tsipras did not say how long banks will remain closed or what restrictions will be placed on transactions. Banking officials said lenders would remain shut for at least a day, according to the Associated Press. Some media have reproted that banks would remain closed for at least a week. The European Central Bank’s emergency credit currently stands at just under 90 billion euros, or $100 billion, according to the Associated Press. In a statement, the central bank said its governing council is willing to review its decision on credit limits.


February 2018
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