Expert: Greeks vote “no” is chaos and exit from the euro zone – Virtual Poland

If the Greeks in a referendum on the conditions for further loans will say “no”, the country awaits a serious financial crisis, the bankruptcy of companies, rising unemployment and exit from the euro zone – predicts Zsolt Darvas, an analyst at the Brussels think tank Bruegel.
 

The expert believes that in the referendum, lack of acceptance of further savings would lead to the fact that the agreement with creditors on the next loan would be impossible. This in turn means that Greece would not be able to repay the debt installments European Central Bank, and this odciąłby Greek banking system of emergency financing.

– In July and August, Greece has to pay 7 billion euros and an additional 20 billion euros over the next few years. If Greece does not repay the ECB, it probably will not provide liquidity for Greek banks. If these do not receive funding you will need to close them. With banks closed, people can not draw money from ATMs or deposits; They will have difficulty buying food for dinner or bread. The companies will have difficulties in paying their suppliers. This all means a serious financial crisis and chaos. I think that in this case, Greece would leave the euro zone – predicts Darvas.
 

In his opinion, such a situation would not be in the short term major adverse consequences for the euro zone itself. He recalled that on Monday, after he unexpectedly came to breaking talks and announcing the referendum bond yields Portugal, Spain, and Italy increased only slightly.
 

– I think the markets are well aware that Greece is significantly different from other euro area countries. Secondly, the ECB is currently carrying out a large-scale government bond buying program, which means that there is a high demand for bonds even peripheral eurozone countries – said the analyst.

Serious long-term consequences
 

In his opinion, it would be too serious long-term consequences as the possible exit of Greece from the euro zone would create a precedent. In the future, even in 2-3 years, another euro zone country that would find themselves in trouble, he would be under much stronger pressure from the markets – Darvas said. In his opinion, this risk meaning financial instability, speculation and market volatility could be expected, eg. Spain, Portugal, and Italy.
 

The expert believes that a Greek exit from the euro zone would mean that most banks would not be able to act, which in turn would mean complete the financial crisis. – Impossible would be simple transactions, such as payments for bills, or removing cash from ATMs. It would cause huge economic chaos. Many companies have gone bankrupt, would increase unemployment. Paradoxically have fallen too much tax revenues, partly by the decline in GDP, and partly by the fact that people do not want to pay taxes in euros, bearing in mind that in a few weeks or months entered will be much weaker currency – he stressed.
 

In his opinion, fall in tax revenues as well as cut off from external financing would mean that the government in Athens would have to introduce savings, despite the fact that Greece would emerge from the euro zone, opposing them.
 

– I think at this point there is no good solution for Greece, but between bad vote “yes” in the referendum is beneficial because it gives hope for an agreement with partners in the euro zone on further funds, which Greece to remain alive – Darvas noted.
 

At least stability
 

He emphasized that fiscal adjustment (increase revenues and / or cutting public spending), which is demanding in exchange for help creditor, will have a negative impact on the economy of Greece, but will at least stability.
 

Bruegel expert is of the opinion that the Greeks after all vote ‘yes’ on offer presented by the IMF, EC and ECB. Then – in his opinion – Greek Prime Minister Alexis Cipras resign from his post. – He led for the past five months the negotiations that led nowhere – he said.
 

In his opinion, in such a situation it would be best if he took over the reins of power with other leaders of the ruling Syrizy to negotiate with lenders could be started without delay. The alternative is the new parliamentary elections, but the organization does not allow to repay the debt within the ECB – pointed Darvas.