This Sunday Greece will hold a referendum on whether or not the nation should accept austerity proposals, linked to bailout funding, offered by the EU, IMF and ECB in late June.
Here’s the state of play, thanks to an excellent note from CBA’s senior currency and rates strategist Peter Dragicevich.
- Polls will be open from 7am to 7pm in Greece (Sunday 2pm to Monday 2am AEST), meaning a result should be known by the time financial markets open in Asia.
- A minimum of 40% of registered voters need to participate in the referendum for the result to be deemed valid. Voting is not compulsory.
- According to Dragicevich, given the expiration of Greece’s second bailout package on 30 June, the referendum is a vote on proposals and a program that no longer exists.
- The ECB has stated that it will not consider extending its ELA program, essentially emergency funding for Greek banks, until the referendum has been held.
- Recent polling has has offered no definitive answer as to which way the populous will vote.
- The ruling government coalition, Syriza and ANEL, are asking citizens to vote to reject the proposed austerity proposals.
- A “no” vote does not mean Greece will leave the Eurozone, but it will increase the prospect of a secondary referendum on the matter. It would also increase the likelihood that Greece will officially default on its debts.
- A “yes” vote would illustrate the Greek public’s commitment to return to the negotiating table and signal a commitment to the euro according to Dragicevich. It would also give a clear political signals in favour of the proposals put forward by the EU/ECB/IMF. It would also see politically uncertainty in the nation increase. Greek finance minister Yanis Varoufakis has stated that he will resign if a “yes” vote prevails. Others in the government, or the entire government, could also follow suit.