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01-06-2015, 07:57 AM
http://www.ft.com/cms/s/0/2f601ae4-060c-...abdc0.html
May 29, 2015 3:46 pm
US warns of Greek exit ‘accident’ as bank outflows soar
By Claire Jones and Stefan Wagstyl in Dresden and Kerin Hope in Athens
US Treasury secretary Jack Lew©Bloomberg
US Treasury secretary Jack Lew
Jack Lew, the US Treasury secretary, has urged Athens and its international creditors to agree a bailout deal as soon as possible, saying delays are heightening the threat of “an accident” that could force Greece out of the eurozone.
His plea for all sides to show flexibility in the talks came as negotiators struggled to make progress towards an agreement that would unlock desperately needed bailout money for Greece.
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It also emerged on Friday that deposit outflows from Greek banks accelerated this week, with about €800m withdrawn on Wednesday and Thursday alone, according to two senior Athens bankers.
Mr Lew’s intervention comes as Greece seeks the release of €7.2bn of aid that has been frozen since last year. Without it, Athens is likely to run out of money and default on its debts — an outcome that would push it perilously close to crashing out of the eurozone.
Mr Lew, in Dresden for a Group of Seven summit of finance ministers and central bank governors, said the long negotiations should be completed “sooner rather than later”.
“If these deadlines were taken seriously it would be a good thing for all parties,” he said.
The US Treasury chief added that delaying an agreement raised the threat of “an accident”. He said: “If you want to avoid that, the sooner you have a serious conversation, then the better.”
His remarks highlight Washington’s growing frustration at the failure of the eurozone and Athens to agree the terms of a reform package, and its concern that a Greek default could send shockwaves through the global economy.
Greece’s bailout monitors — the International Monetary Fund, the European Commission and the European Central Bank — insist that Athens must present a comprehensive reform programme if the €7.2bn is to be disbursed.
More video
Mr Lew made clear that the onus was on Athens to show some flexibility. The radical Syriza-led government needed to “make some very tough decisions” and to “show with clarity the steps they’re prepared to take”, he said.
But he acknowledged that the creditors also needed to be more pliant. “All parties need to move,” he said.
Eurozone officials say Athens now has to agree a deal by the end of next week in order to ensure that eurozone parliaments have enough time to ratify any bailout changes by the end of June.
The IMF confirmed this week that Athens would be permitted to delay all its June repayments until the end of the month, removing the threat that Greece could default as soon as next Friday, when €300m falls due.
“There is great uncertainty at a time when the world needs greater stability and certainty,” said Mr Lew.
World blog
Lagarde, the blame game and Greece
President of the International Monetary Fund (IMF) Christine Lagarde and the President of the Deutsche Bundesbank Jens Weidmann converse before a group photo in the Royal Palace in Dresden, Germany, 28 May 2015. Finance ministers and central bank governors from the seven leading western industrial states (G7) are meeting in the capital of Saxony from 27 to 29 May 2015. Photo: ARNO BURGI/
Christine Lagarde made headlines after saying in a German press interview that Grexit was “a potential” - but was she passing the buck?
Michel Sapin, the French finance minister, said in Dresden that all parties remained committed to the talks and keeping Greece into the eurozone. “There is no Grexit scenario,” he said.
But Wolfgang Schäuble, the German finance minister, was more cautious, saying: “The positive news from Athens is still not fully reflected in the state of negotiations of the government in Athens with the creditors.”
His comments reflected his irritation about recent statements from Greece forecasting a successful early end to the talks.
A steady decline in deposits since last October has forced Greek banks to seek emergency liquidity assistance (ELA) from the country’s central bank, which is approved on a weekly basis by the ECB.
According to ECB data published on Friday, total bank deposits fell from €145bn in March to €139.4bn in April, the lowest level in more than a decade. The €5.6bn decline marked an acceleration from the previous month when €1.9bn left the banks.
Business and household deposits shrank by 3.5 per cent to €133.6bn, falling for the seventh straight month, according to the ECB.
“The pace [of withdrawals] picked up in the last couple of days after several weeks of calmer conditions,” said one banker.”There’s been a lot of political noise which had an impact on depositors’ confidence.”
Greek companies continue to set up accounts with banks elsewhere in the eurozone, while scores of state entities have moved funds to the central bank’s common fund, which is used to pay wages and salaries, said another banker.
However, the Greek central bank held off requesting a further injection of ELA this week on grounds that outflows had stabilised in May. A central bank official said the liquidity buffer had increased since last week to more than €3bn.
May 29, 2015 3:46 pm
US warns of Greek exit ‘accident’ as bank outflows soar
By Claire Jones and Stefan Wagstyl in Dresden and Kerin Hope in Athens
US Treasury secretary Jack Lew©Bloomberg
US Treasury secretary Jack Lew
Jack Lew, the US Treasury secretary, has urged Athens and its international creditors to agree a bailout deal as soon as possible, saying delays are heightening the threat of “an accident” that could force Greece out of the eurozone.
His plea for all sides to show flexibility in the talks came as negotiators struggled to make progress towards an agreement that would unlock desperately needed bailout money for Greece.
More
ON THIS TOPIC
Tsipras accuses monitors of ‘absurd’ demands
Greek exit is ‘a potential’, says Lagarde
Athens and Berlin try to ease default fear
The Short View Greek debt markets
IN EU ECONOMY
ECB warns of shadow banking sector risks
EU ombudsman rebukes ECB over market leaks
EU economies to expand after 2008 crisis
Doubts grow over full eurozone rebound
It also emerged on Friday that deposit outflows from Greek banks accelerated this week, with about €800m withdrawn on Wednesday and Thursday alone, according to two senior Athens bankers.
Mr Lew’s intervention comes as Greece seeks the release of €7.2bn of aid that has been frozen since last year. Without it, Athens is likely to run out of money and default on its debts — an outcome that would push it perilously close to crashing out of the eurozone.
Mr Lew, in Dresden for a Group of Seven summit of finance ministers and central bank governors, said the long negotiations should be completed “sooner rather than later”.
“If these deadlines were taken seriously it would be a good thing for all parties,” he said.
The US Treasury chief added that delaying an agreement raised the threat of “an accident”. He said: “If you want to avoid that, the sooner you have a serious conversation, then the better.”
His remarks highlight Washington’s growing frustration at the failure of the eurozone and Athens to agree the terms of a reform package, and its concern that a Greek default could send shockwaves through the global economy.
Greece’s bailout monitors — the International Monetary Fund, the European Commission and the European Central Bank — insist that Athens must present a comprehensive reform programme if the €7.2bn is to be disbursed.
More video
Mr Lew made clear that the onus was on Athens to show some flexibility. The radical Syriza-led government needed to “make some very tough decisions” and to “show with clarity the steps they’re prepared to take”, he said.
But he acknowledged that the creditors also needed to be more pliant. “All parties need to move,” he said.
Eurozone officials say Athens now has to agree a deal by the end of next week in order to ensure that eurozone parliaments have enough time to ratify any bailout changes by the end of June.
The IMF confirmed this week that Athens would be permitted to delay all its June repayments until the end of the month, removing the threat that Greece could default as soon as next Friday, when €300m falls due.
“There is great uncertainty at a time when the world needs greater stability and certainty,” said Mr Lew.
World blog
Lagarde, the blame game and Greece
President of the International Monetary Fund (IMF) Christine Lagarde and the President of the Deutsche Bundesbank Jens Weidmann converse before a group photo in the Royal Palace in Dresden, Germany, 28 May 2015. Finance ministers and central bank governors from the seven leading western industrial states (G7) are meeting in the capital of Saxony from 27 to 29 May 2015. Photo: ARNO BURGI/
Christine Lagarde made headlines after saying in a German press interview that Grexit was “a potential” - but was she passing the buck?
Michel Sapin, the French finance minister, said in Dresden that all parties remained committed to the talks and keeping Greece into the eurozone. “There is no Grexit scenario,” he said.
But Wolfgang Schäuble, the German finance minister, was more cautious, saying: “The positive news from Athens is still not fully reflected in the state of negotiations of the government in Athens with the creditors.”
His comments reflected his irritation about recent statements from Greece forecasting a successful early end to the talks.
A steady decline in deposits since last October has forced Greek banks to seek emergency liquidity assistance (ELA) from the country’s central bank, which is approved on a weekly basis by the ECB.
According to ECB data published on Friday, total bank deposits fell from €145bn in March to €139.4bn in April, the lowest level in more than a decade. The €5.6bn decline marked an acceleration from the previous month when €1.9bn left the banks.
Business and household deposits shrank by 3.5 per cent to €133.6bn, falling for the seventh straight month, according to the ECB.
“The pace [of withdrawals] picked up in the last couple of days after several weeks of calmer conditions,” said one banker.”There’s been a lot of political noise which had an impact on depositors’ confidence.”
Greek companies continue to set up accounts with banks elsewhere in the eurozone, while scores of state entities have moved funds to the central bank’s common fund, which is used to pay wages and salaries, said another banker.
However, the Greek central bank held off requesting a further injection of ELA this week on grounds that outflows had stabilised in May. A central bank official said the liquidity buffer had increased since last week to more than €3bn.