Euro zone leaders will hold an emergency summit on Monday after a the region’s finance ministers failed to agree a reform-and-aid deal with Greece, making it more likely the near-bankrupt country will default on its debt at the at the end of the month.
European political leaders and economists are now preparing for financial turmoil and potential capital controls in Greece on the back of a Reuters report that Greek savers had pulled about 2 billion euros out of banks over the past three days.
The large deposit outflows seen in Greece prompted the European Central Bank (ECB) to reportedly express doubts on whether Greek banks would open on Monday. The ECB is to hold a teleconference on Greece on Friday to discuss extending emergency liquidity to the country.
The emergency summit was called after the euro zone’s finance ministers – the so-called Eurogroup – failed to reach a deal on reforms with Greece when the group met in Luxembourg on Thursday.
The reforms would allow Greece to receive a last tranche of bailout aid worth 7.2 billion euros but sticking points remain over pension cuts. Without the money, Greece has said that it could not make a 1.54 billion euro ($1.74 billion) debt repayment to one of its senior creditors, the International Monetary Fund (IMF), on June 30.
After five months of stalled talks over reforms, Greece now has just the weekend to come up with a last-ditch plan to present to creditors in order to stave off the ignominy of a default — and what its own central bank predicted the recently would be an “uncontrollable crisis” following such an event.