People of Greece probably voted for a government that sold them mere dreams.
Despite repeated assurances from the Greek government that it's nearing a bailout deal, cash is running extremely low, and every day without one increases the chance that the government defaults on its debt repayments.
But what happens to ordinary Greeks in that situation?
Currently, the European Central Bank (ECB) has the Greek banking sector on life support in the form of Emergency Liquidity Assistance (ELA). That's meant to be a short-term method to prevent a crisis of liquidity (as the name suggests).
It's not a long-term prop for the system, and the ECB may not continue providing the funds if the country becomes even more obviously insolvent.
Gilles Moec from Bank of America explained this in a recent note:
By controlling Greek banks' access to liquidity via ELA, the ECB is in a crucial position. Were the central bank to "turn the tap off", then mechanically the Greek banking sector would go bust, since resident credit institutions could no longer deal with the deposit outflows.
#Greece
http://www.businessinsider.in/heres-the-brutal-reality-for-ordinary-greeks-if-the-government-defaults/articleshow/47346201.cms?utm_source=twittershare&utm_campaign=bimobile&utm_medium=referral
Despite repeated assurances from the Greek government that it's nearing a bailout deal, cash is running extremely low, and every day without one increases the chance that the government defaults on its debt repayments.
But what happens to ordinary Greeks in that situation?
Currently, the European Central Bank (ECB) has the Greek banking sector on life support in the form of Emergency Liquidity Assistance (ELA). That's meant to be a short-term method to prevent a crisis of liquidity (as the name suggests).
It's not a long-term prop for the system, and the ECB may not continue providing the funds if the country becomes even more obviously insolvent.
Gilles Moec from Bank of America explained this in a recent note:
By controlling Greek banks' access to liquidity via ELA, the ECB is in a crucial position. Were the central bank to "turn the tap off", then mechanically the Greek banking sector would go bust, since resident credit institutions could no longer deal with the deposit outflows.
#Greece
http://www.businessinsider.in/heres-the-brutal-reality-for-ordinary-greeks-if-the-government-defaults/articleshow/47346201.cms?utm_source=twittershare&utm_campaign=bimobile&utm_medium=referral
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