Several developments last week arguably brought Greece closer to exiting the euro-zone than it has ever been. While the Government appeared to give ground on its demands for debt restructuring, its terms still seem unpalatable to the Troika. And the ECB’s decision no longer to accept Greek sovereign bonds as collateral for its lending operations increased the risk of a banking sector collapse.
Greece has financing needs of around €10bn in the first half of this year that it cannot meet as things stand. Recent moves to reverse austerity suggest that remaining bailout money is very unlikely to be paid. Meanwhile, the ECB has snubbed Finance Minister Varoufakis’ proposal for the Government to issue an extra €10bn of T-Bills to cover its costs.
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