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ECB's Draghi doubts Greek solution

Thursday, July 09, 2015 - 01:45

ECB President Mario Draghi has voiced unprecedented doubts about the chances of rescuing Greece from bankruptcy as Greek Prime Minister Alexis Tsipras was due to put forward last-ditch reform proposals on Thursday. As Sonia Legg reports, a new poll of economists also shows most think a Grexit can't be avoided.

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It's more likely than not for the first time - 55 percent of economists now think Greece will leave the euro. The Reuters polls shows how close a euro zone split is - with all its consequences, known or otherwise. The Greek government must submit detailed reform plans within hours. Even the boss of the European Central Bank reportedly doubts Greece can avoid bankruptcy. Simon Derrick is Chief Market Strategist at Bank of New York Mellon. (SOUNDBITE) (English) SIMON DERRICK, CHIEF MARKET STRATEGIST, BNY MELLON. SAYING: "We've been in this crisis for five and half years now and clearly we have not resolved it and I think the point we are at right now is the point where euro zone politicians and officials like Mr Draghi have finally had enough." The ECB has been keeping Greece's closed banks afloat. And even if there is a solution it may not be business as usual when they do reopen. Serious sector reorganisation is expected with stronger banks taking over weaker ones. That can either happen smoothly with ECB support - or not. (SOUNDBITE) (English) SIMON DERRICK, CHIEF MARKET STRATEGIST, BNY MELLON. SAYING: "I think without their support the only way they will survive is if the Bank of Greece is able to provide liquidity itself and of course it can only do that if it prints money and it can only do that if we are on the way - albeit maybe indirectly - towards a proper Grexit." Alexis Tsipras has been huddled with advisors since returning from Brussels. He knows he must include pension reforms and tax hikes in his proposal. And it could end up being tougher than the one voters reject in Sunday's referendum. Greek newspapers say the package is worth 12 billion euros - the last one was only 8 billion. The need for more follows two weeks of capital controls. The economy is now expected to shrink 3 percent instead of growing 0.5 percent.

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ECB's Draghi doubts Greek solution

Thursday, July 09, 2015 - 01:45