Greece threatens to sue

greekflag

And so now we come down to the wire for Greece.

The question now is whether it would be a default if Greece misses its $1.7 billion payment to the International Monetary Fund today and is forced to exit the Eurozone.

Greece is fighting hard to stay right in there with the Daily Telegraph in London reporting that the debt-stricken nation could sue to stay in the Eurozone if it fails to reach a debt deal.

“The Greek government will make use of all our legal rights,” Greek Finance Minister Yanis Varoufakis told the newspaper. “We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for (a) euro exit and we refuse to accept it. Our membership is not negotiable.”

And the most important player in all of this, the European Central Bank, is keeping shtum. According to Bloomberg, it’s declined to comment on what position it will take if Greece fails to meet the payment, something everyone expects.

The three major credit-rating companies say failure to pay the Washington-based IMF wouldn’t constitute a default because that term is reserved for private-sector creditors, and the IMF is no private sector creditor.

The big issue is the solvency of the Greek banks and the European Central Bank has been keeping the Greek banking system alive with almost 89 billion euros of Emergency Liquidity Assistance.

Let’s not forget that European Central Bank chief Mario Draghi famously vowed in 2012 to “do whatever it takes” to save the euro. So it’s not over yet.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s