NEW DELHI: A ‘No’ vote means that the probability of a Grexit would rise to 75 per cent, Credit Suisse said in a report. We think that Syriza would be less willing to compromise, statements from European politicians would imply that it is no longer trusted as a reliable counterparty in the negotiations with the European creditors.
Moreover, any deal would be highly conditional and thus we would likely be back to square one quite quickly. The bank holiday would continue, with some banks likely to run out of cash.
With 75% of Greeks wanting to stay in the Euro (according to an Alco poll), a new referendum/election cannot be ruled out.
The global research firm is of the view that now the crunch date is July 20th: if Greece defaults to the ECB, then Greek banks are, in our view, insolvent, and the emergency liquidity assistance (ELA) would be
withdrawn (unless this was during an election period).
“On ELA withdrawal the probability of Grexit rises even further. We doubt that it is politically acceptable for the ESM to recapitalise Greek banks,” said the report.
July 20th is when the Greek government has to repay 3.5bn of ECB-held bonds. Without an agreement by that time, the Greek government will default to the ECB and if they default on the ECB, then Greek banks would likely become insolvent.
(Source : Economic Times )
