Greece’s future in the eurozone looks more perilous than ever, and the next 48 hours could be critical.
On Monday, the European Central Bank will meet to discuss the emergency liquidity provided to Greek banks (which is currently capped, forcing capital controls to be imposed a week ago).
German chancellor Angela Merkel and French president Francois Hollande will meet in Paris on Monday night.
In the UK, prime minister David Cameron will meet with Chancellor George Osborne and governor of the Bank of England Mark Carney to discuss the impact on Britain’s financial stability.
Then on Tuesday, eurozone leaders will debate the crisis at an emergency summit. Eurozone finance ministers will hold a Eurogroup meeting that afternoon.
Eurogroup president Jeroen Dijssebloem has already criticised the result of the referendum, warning:
“I take note of the outcome of the Greek referendum. This result is very regrettable for the future of Greece.”
A series of financial analysts have warned tonight that Greece is likely to exit the eurozone. As Barclays warned:
“While Chancellor Merkel and President Hollande are scheduled to meet tomorrow, we argue that EMU exit now is the most likely scenario….”
Finance minister Yanis Varoufakis, though, has denied this is an option. Meanwhile Varoufakis has announced he resign as finance minister. This is probably a move to try to ease the tension with EU and further negotiations.
And the world’s stock markets are expected to suffer falls when trading begins.
The FTSE 100 index of blue chip shares is tipped to drop by over 2%, and the euro has already lost around 1% against the US dollar, even before Asian trading got fully underway.
Stock markets PLUNGING:
The FTSE 100 Index initially dropped 73.3 points to 6509.5 after Greece voted to reject the terms of an international bailout in Sunday’s referendum. By midday the index had risen to around 6547.
And after opening sharply lower, European stock markets recovered some ground on the news that Greece’s finance minister Yanis Varoufakis had resigned.
The Stoxx 50 index of leading European shares was down 1.6% while Germany’s DAX fell 1.2%.
Earlier, Hong Kong stocks plunged 3.18% by the end of the morning’s session as the No vote to further austerity overshadowed news that China had unveiled fresh measures to support slumping mainland markets.
Tokyo’s benchmark stock index dropped 1.58% this morning. The Nikkei 225 at the Tokyo Stock Exchange fell 324.63 points to 20,215.16 by the break.
European leaders have reacted with a mix of dismay and caution after Greek voters defied their warnings of a possible Grexit by saying No. Typically the European elite and capitalists are nervously looking down to the ground zero of economic domes day. Let them just do it- the people watch!