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Greece: euro zone must choose too

Monday, July 06, 2015 - 01:55

Greece makes its choice and now - with its banks rapidly running out of cash - the euro zone faces its own momentous decision: whether to keep Greece afloat and how to pay the vast bills for doing so. David Pollard reports.

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Athens celebrates. A defiant 'NO' to creditors in Sunday's referendum getting far more votes than expected. But after the party comes the bill. Greece's four main banks reportedly have only one billion euros left. And ordinary Greeks are on the brink, possibly, of severe hardship. Paying for basics - hard enough. But paying for bailouts - the figures boggle. Greece owes over 240 billion euros to international lenders. Germany the biggest single creditor - at nearly 60 billion. Writing off some of it might keep Greece's financial system alive. But would mean huge losses for lenders. And German chancellor Angela Merkel out of favour with voters keenly against more help for Athens. (SOUNDBITE) (English) ALASTAIR McCAIG, MARKET ANALYST, IG, SAYING: ''I don't think it's a question of whether she has the nerve to allow Greece leave the euro zone - I think it's question of how much flexibility they are able to offer the Greeks and ultimately what the Greeks will do on the back of that. As far as flexibility is concerned, it was always the Greeks who were going to have to be more flexible, and nothing has changed in that regard.'' The spotlight today falls on the ECB. Will it, won't it extend more crisis cash? Eighty-nine billion euros of emergency liquidity assistance has already been lent to Greek banks. Even if kept at that level, they could still run out of money within days. A reduction would force Greece to print its own, alternative currency. But any increase - another political minefield. (SOUNDBITE) (English) ALASTAIR McCAIG, MARKET ANALYST, IG, SAYING: ''There's a real worry that this could be a dominoes effect, whereby if greater flexibility were to be offered to Greece, then Spain would follow suit, and then you'd would have to imagine that there would be a number of other countries that would potentially look to utilise that ability to replicate that for themselves.'' A classic dilemma for a euro zone on the edge. But this time, with no sign of a classic euro zone fudge on hand to solve it. And either way, Europe left with a massive bill.

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Greece: euro zone must choose too

Monday, July 06, 2015 - 01:55