Greece and its creditors of Euro Zone have failed to reach on any agreement in the most important talk to prevent a Greek default. The EU has called an emergency meeting of the EU state heads on the issue on Monday just eight days remaining for the Greek repayment of 1.6 billion Euros to IMF.
The European Council President Donald Tusk revealed that the heads of state meeting has to find a political solution to the crisis.
The President told that it is now time to “urgently discuss” the Greek crisis “at the highest political level”.
Greece was demanding for a political solution while ruling out austerity measures. The Financial Times of London quoted many EU Finance Ministers that; the Greek PM Alexi Tsipras may choose for a bailout plan by agreeing to the creditors demand on Monday. For EU, the Greek exit will make the currency union arrangement an immature venture. But for Greece, an immediate outcome is that it will lead to failure of its banking system.
During the Finance Minister’s meeting, other EU ministers cautioned Greece about a possible run in the Greek banking system if Athens fails to reach consensus on bail out. Failure of the banking system will be severe than expenditure cutting reforms, many told Greek FM Yanis Varoufakis. Mr Varioufakis is a renowned academician and a pundit on game theory which deals with strategic decision making.
On Wednesday, the Greek central bank has warned that a failure on bailout will not only mark Greekexit from Euro but also fall of many Greek banks. “A ‘manageable debt crisis’ would ‘snowball into an uncontrollable crisis, with great risks for the banking system and financial stability’, the bank cautioned about the looming crisis in its banking system.
Reports from EU indicate that already many banks in Greece are on the verge of liquidity crisis. Things are going to worse very quickly for Greece and the Greek central bank has requested for an emergency meeting of European Central Bank on Thursday night.
The worsening conditions of the banking sector will put more pressure on Syrzira to agree with EU lender’s demands on Monday.