Dear Traders
Will
the markets gap for a third week in a row at market open?
EU
leaders have issued an ultimatum to the Greek government, ‘reach an agreement
with your creditors or face crashing out of €uro’
Alexis
Tspiras has made a three year proposal and it looks as if Germany are bowing to
pressure to avoid a disastrous rupture to monetary union.
It is
acknowledged that Greece’s public debt, 180% of GDP, can never be repaid
and German Chancellor Angela Merkel said “a classic haircut” is out of
question.
If you
look at the FX option market, volatility has fallen, are investors missing the
point that the GREXIT could happen this week end?
Below
is the time line for the next 72 hours
Athens
have formally submitted a request for a three year bailout. The two previous
bail outs where submitted before the ESM (European Stability Mechanism) even
existed. The European Commission in liaison with the ECB must evaluate this
request in 24hours.
Saturday
Under
the ESM treaty, the ESM’s board of governors (the Eurozone’s 19 finance
ministers) decide whether formal negotiations should begin.
If
there are grounds for progression the trio of bailout monitors – the ECB, the
European Commission and IMF - will develop a ‘memorandum of understanding’.
This title may be changed as it presently stands for the austerity measures
that the Greek people are living under.
Sunday
If the
Eurozone’s finance minister agree to commence bail out talks this summit may
not be needed. However if no deal has been struck, leaders from all 28 EU
countries will be summoned to Brussels to sort out the mess. There is a
humanitarian relief programme that may be required for fuel, food and medicine.
Monday
If a
deal has been approved by the finance ministers then parliamentary approval
will be need before permission is officially granted
If no
deal has been agreed then the ECB governing council will convene to withdraw
the €89bn and the GREXIT will ensue
I hope
this helps your understanding of the events.
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