Three absolutely crucial meetings for Greece’s financial future are taking place Wednesday.
The outcome of pretty much all of them will have to be positive, or at least neutral, for markets to keep taking a positive view of Greece’s new plans for restructuring its huge debts.
The first meeting is at the European Central Bank. A Reuters exclusive Tuesday revealed that two Greek banks have tapped the emergency liquidity assistance (ELA) mechanism for €2 billion. That comes from the ECB, and the governing council has to approve or deny the assistance every two weeks. It is doing that Wednesday morning.
Here’s Lloyds’ research team on the subject, emphasis ours:
The ECB holds the key to Greece’s survival until the completion of the negotiations through the liquidity provided to Greek banks. Today’s non-rate setting meeting is expected to extend the ELA for another 2 weeks but the post-February situation looks still unclear. As already discussed next week’s EU summit is key and there is a high probability of an extraordinary Eurogroup early next week (the Eurogroup is a summit of all of the eurozone’s finance ministers).
Finance minister Yanis Varoufakis’ has met with ECB chief Mario Draghi. Draghi has previously said that the ECB’s liquidity assistance is subject to Greece’s sticking to its bailout agreement, which Varoufakis wants to scrap.
A big gap exists between the official end of the bailout (if it isn’t extended) at the end of February and a full deal on debt, which most likely would not come for months (if at all), so it is crucial for the new Greek government that the ECB still acts as a backstop for the country’s banks — Varoufakis will most likely need Draghi’s tentative agreement for that. The new finance minister says he had a “fruitful exchange” with Draghi but gave no more detail than that.
Varoufakis has already been making waves in the German media early Wednesday: He told the German newspaper Zeit that he was the “finance minister of a bankrupt country.”
The headline meeting is between Greek Prime Minister Alexis Tsipras and European Commission President Jean Claude Juncker. Tsipras is continuing his tour of Europe in Brussels, and Juncker is the most important person he has met in terms of his plans for Greece’s debt. They were pictured hand-in-hand early Wednesday, but this won’t be an easy negotation.
The discussions might wave been a little bit awkward: Just a few months ago Juncker said that if Tsipras were elected, it would be a “major risk” for Greece and that he had “not adequately understood what the problems are” in his own country.
German newspaper Die Welt headlined their own coverage with “Relationship status: It’s complicated“. The European Commission says they have “agreed to have further discussions but not through the media.“
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