Greece, at risk of a playpen – The Economist

Power launched the euro zone alert. Yesterday they went mde 400 banks; in earlier days it was between 200 and 250 mde day

The outflow of capital from banks intensified.; its shares on the stock exchange were the best sellers. Photo: AFP

In the absence of agreement, eurozone sources predicted that a stampede of capital may occur in Greece, as an extreme measure, force the government of Tsipras to declare a playpen, similar to that Argentina applied in 2001.

In May, Moody’s warned in a report that the outflow of deposits of the Hellenes banks, which stood at its lowest in 10 years at end-April level, significantly increased the risk that capital controls are established in Greece.

“The persistence of these outputs significantly increases the risk of local authorities to impose controls capital to limit the outflow of deposits, which, in our view, amount to a default on bank deposits “, he said the rating agency.

Moody’s warned that the so-called corralito could help limit damage liquidity of Greek banks. It also would raise uncertainty about the possibility of free access to families and businesses money deposited in the banks.

In the first session of the week, Greek banks recorded outflows of deposits by 400 million euros, an increase in the rate of cash withdrawal, after negotiations with Greece’s creditors in exchange for reforms broke.

followed and sterile negotiations the last five months fueling uncertainty and fear that capital controls are set, a situation that has led savers to withdraw from banks between 200 and 250 million euros a day as the days pass and the negotiations are going nowhere.

Tsipras the challenges

Yesterday, Greek Prime Minister Alexis Tsipras, struck a defiant tone with creditors, hours after failing to return to the negotiations between both parties on the program of aid to Athens.

The leader said that Greece will wait “patiently” until their creditors, the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Union (EU), “adhere to realism.”

Tsipras attacked creditors, for what he called “political opportunism” to try to force cut further its pension system, a move that the anti-austerity government has always refused to apply.

“One can only see a political purpose in creditors’ insistence on further cuts in pensions after five years of looting under the bailouts,” said Prime Minister Ephimerida ton Syndakton daily.

What you are at stake

Greece and its creditors negotiate the disbursement of the last tranche of aid, of 7,200 million euros, in exchange for a reform program on which not to agree.

The government of Tsipras said he was prepared to return “at any time” to the negotiating table, but insisted that the Greek offer must be the basis of discussions.

Greece would however, willing to accept the goals of primary surplus (outside of debt payments) set by creditors this year (1%), according to Annika Breidthardt, a spokeswoman for the European Commission.

That point meant one of the greatest obstacles in the negotiations, since Greece establishes a surplus of 0.6% by 2015.

Disagreement between creditors

The IMF and the EU had to Athens five-point proposal, which they insist on a tax adjustment for the country and the pension reform.

The “ball is undoubtedly on the roof” of Greece, said Monday the president of the ECB Mario Draghi.

“We will not accept measures that go up VAT on basic food and a reduction of pensions,” he said, for its part, government spokesman Gabriel Sakellaridis.

“is one of the most expensive pension systems in Europe and is part of a reform requests creditors,” the European Commission said, recalling that “institutions not called for a reduction of pensions at an individual level.”

The head of the IMF, Olivier Blanchard, an economist considered Sunday a VAT hike and pension reforms were essential in Greece, while calling on European governments to have a gesture on Greek debt.

alert until Thursday

The disagreement between creditors facilitates negotiations and there is no meeting scheduled with Athens until the next meeting of the Eurogroup on Thursday. Finance Minister, Yanis Varoufakis will represent Greece while Tsipras will travel to Moscow for the second time in two months.

The bank, a prison from which no escape money

In 2001, during the Argentina crisis, the government of Fernando de la Rua restricted the free disposition of cash, which every citizen could take the bank to a maximum of 250 pesos a week, this was called corralito.

This financial mechanism lasted almost a year in the South American country and its main objective was to prevent the outflow of money from the banking system to avoid a wave of bank runs and eventually the collapse of the system.

The word “corralito” was used in Argentina to refer to a place surrounded by bars which are locked toddlers. A children’s cage so they do not escape and stay safe

With irony adopted the term to refer to banks.. Prisons where the money should not escape

Cyprus also He applied this measure in 2013. Blocked deposits and bank branches closed to prevent leakage. (With information Drafting)