Greece debt crisis: banks on brink of collapse as savers panic:The Times

Vienna, 19 June 2015 (MIA) - Greek banks are facing collapse and the country is “dangerously close” to exiting the euro, officials warned after talks to prevent Greece defaulting on its debts ended in failure last night, The Times reads.

In secret negotiations, and with panicking savers withdrawing cash, the European Central Bank (ECB) said that Greek banks might be forced to remain closed on Monday. Some euros 2 billion (pounds 1.4 billion) in deposits have already been taken out of the country in the first three days of this week.

Tourists heading to Greece have been warned to take cash in case of emergencies. Two million Britons visit the country each year. The deteriorating situation will lead to fears of strikes or protests, for which airlines do not usually compensate passengers.

During yesterday’s talks, Benoit Coeure, an executive board member of the ECB, was asked by Jeroen Dijsselbloem, the Dutch chairman of the group of European finance ministers, if Greek banks would open today.

He replied: “Tomorrow, yes. Monday, I don’t know.”

Eurozone leaders will hold an emergency summit in Brussels on Monday to consider a “plan B” for Greece, with the threat of draconian measures ranging from capital controls to leaving the single currency.

“It’s our deepest wish to keep Greece in the eurozone, but, having said that, we’re prepared for all eventualities,” said Mr Dijsselbloem. “Time is running out. Very little time remains.”

The latest impasse in Luxembourg came as the situation in Greece worsened sharply. Figures released yesterday showed a collapse last month in revenues collected by the state of euros 900 million - or 24 per cent - for May, pushing the country closer to bankruptcy. Eurozone finance ministers and officials from the ECB and International Monetary Fund warned Greece that it faced a stark choice between surrendering to austerity demands or the plan B - bankruptcy and default as soon as next week.

For the first time in the crisis, Pierre Moscovici, the European commissioner for economic affairs and a key ally for Greece, admitted that a Greek exit from the euro was on the agenda.

“Now we find ourselves at the moment when we are reaching the endgame,” he said. “I would like to appeal to the Greek government to accept that reasonable compromises have to be made to avoid a fate that would be catastrophic.

“It’s in everybody’s interest that we keep together the euro project as a whole.”

Yanis Varoufakis, the Greek finance minister, warned that some eurozone countries, such as Germany, were beginning to accept the idea of default and Greece leaving the single currency as an option in the talks.

“We are dangerously close to a state of mind that accepts an accident,” he said.

An “accident” for Greece could occur within days, the ECB told eurozone finance ministers, because the country’s precarious banking sector is teetering on the brink of collapse, a crisis that could force the imposition of capital controls.

A senior EU official said that the warning of an imminent bank collapse was the primary reason for holding an emergency summit as Greece provokes another existential crisis for the euro.

Alexander Stubb, the Finnish finance minister, said that Greece had two clear options: accept the eurozone and IMF demands for pension cuts and tax increases in return for loans, or face bankruptcy and default.

“If we don’t get a deal, we go to option B, which, in effect, means default for Greece,” he said. “We should do everything in our power to keep Greece in the eurozone - but we cannot do that at any cost.”

If the emergency summit cannot resolve the crisis, Greece will default at the end of the month amid a major banking crisis, possibly after the introduction of capital controls as early as this weekend or on June 27.

The highly indebted and bankrupt country would also lose euros 18.1 billion in loans, euros 7.2 billion for financing the Greek state and euros 10.9 billion that is currently set aside for recapitalising banks in Greece

Janis Reirs, Latvia’s finance minister, said: “The situation can only be saved by a miracle.