Meanwhile deposits continue to flee the country (total deposit outflow data for March is expected later this month). Greek banks do not have much room for manoeuvre and tension is indeed being felt at european financial markets.
Not much is expected at the upcoming Eurogroup meeting on Friday, so May 11’s meeting is almost consider an ultimatum. On May 12, Greece has to make a third payment to the IMF amounting to €770bn (before May 1, the country has to pay €203 million and €1.6bn in June).
So what are the alternatives for Athens?
-A satisfactory agreement
– An in extremis, watered-down agreement to prevent sovereign default.
-A sovereign default, but not a banking default (extension of the emergency liquidity assistance ELA, which is more costly than borrowing from the European Central Bank) and establishment of capital controls.
– A Grexit after a banking and sovereign default.
“We bet on the second option, although it would not solve Greece’s core problem,” experts at Spanish Financial Analists Institute (AFI) commented on Tuesday. “We cannot rule out extreme scenarios.”