May 15, 2012 10:38 PM CT
Greek President Karolos Papoulias was told by the central bank chief this week that financial institutions are becoming anxious about their prospects as Greeks pull out cash after the inconclusive May 6 elections.
Central bank head George Provopoulos told Papoulias that Greeks have withdrawn as much as 700 million euros ($891 million) and the situation could worsen, according to the transcript of the president’s meeting with party leaders on May 14 that was published yesterday.
“Provopoulos told me that of course there’s no panic but there’s great fear which can evolve into panic,” he said.
Greece’s future in the euro has been thrown into doubt by the political standoff, forcing the president to call for new elections yesterday. German Finance Minister Wolfgang Schaeuble called the next vote a referendum on whether Greece exits the euro, a move that would leave lenders to its government, businesses and households unsure of recouping their money.
The risk of a run on Greek banks is “a very serious problem,” Yannis Ioannides, professor of economics at Tufts University in Massachusetts, told Bloomberg Television. He said the European Central Bank needs to guarantee deposits held by the region’s lenders to guard against contagion. “That’s the only way to kill a bank run: not words but deeds.”
Asian stocks fell for a sixth day, with the MSCI Asia Pacific Index (MXAP) sliding 1.8 percent at 12:12 p.m. in Tokyo. The euro traded less than 0.1 percent from the weakest level in almost four months. Greece’s benchmark ASE Index (ASE) fell to its lowest since 1992 yesterday.
Greek leaders will seek agreement today on an interim government that will schedule new elections as early as June 10. Public opinion polls suggest the Syriza party, which opposes the austerity measures pledged by Greece as part of an international bailout, may come in first place.
The country will run out of cash by early July if partners withhold their next aid payment. The European Financial Stability Facility on May 9 confirmed that a 5.2 billion-euro tranche will be released by the end of June, with 4.2 billion euros already disbursed May 10. The remaining 1 billion euros will be released depending on Greece’s financing needs.
The once-taboo issue of a Greek withdrawal or expulsion from the 17-nation currency union burst into the public debate last week, starting in Germany, Europe’s biggest economy and the country that invented the euro’s low-debt rules.
‘Catastrophe’ for Greece
European Central Bank officials including Patrick Honohan of Ireland and Luc Coene of Belgium weighed the arguments for and against a euro exit, adding to speculation that a currency designed to last forever might start splintering after 13 years.
Leaving the euro would be a “catastrophe” for Greece, with the risk of a run on banks, former Greek Prime Minister Costas Simitis said yesterday in Beijing. Banks would have to close for at least three months while preparations, including printing a new currency, are made, Simitis said, citing the views of “experts.”
“Having the banks close for three months — that’s nonsense,” Simitis said, adding that he believes Greece will stay in the euro. “If they close more than three days there will be a bank run.”
Karolos Papoulias was born on June 4th, 1929 according to http://en.wikipedia.org/wiki/Karolos_Papoulias
6 + 4 +1+9+2+9 = 31 = his life lesson = Controversy. Struggling. Things get out of hand.
using the number/letter grid:
1 2 3 4 5 6 7 8 9
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z
A = 1 J = 1 S = 1
B = 2 K = 2 T = 2
C = 3 L = 3 U = 3
D = 4 M = 4 V = 4
E = 5 N = 5 W = 5
F = 6 O = 6 X = 6
G = 7 P = 7 Y = 7
H = 8 Q = 8 Z = 8
I = 9 R = 9
2196361 717633911 66
his path of destiny = 66 = Managing money.
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