News2Share commentator Jon-Christopher Bua weighs in
Video by Ford Fischer and Alejandro Alvarez
After five years in a debt crisis, Greece’s financial clash with the euro is fast approaching an endgame. With the country imposing capital controls and closing banks for the near future, the next big question is whether or not Greece will vote to keep the euro.
The result has been a full-blown bank panic: Greek citizens and anxious pensioners have been lining up to withdraw from ATMs. Greece’s central bank, however, has imposed a 60 euro limit on withdrawals. The uncertainty has driven over 17,000 demonstrators to gather on the streets of Athens to back Prime Minister Tsipras in his fight against the latest bailout deal.
On Sunday, the future of Greece in the eurozone will be decided at Greek polling stations. The Greek government is still trying to negotiate with its European creditors to create a deal before the referendum or the expiration of the bailout tomorrow.
Tsipras said the referendum is intended to make the country stronger and would hopefully be followed by negotiations.
Even though Greece makes up a small percentage of the European economy, leaving the euro could potentially cause a cascading economic crisis, a sort of ‘financial contagion’. If Greece leaves the euro, other European countries may follow and the euro could significantly decrease in value.
The bank shut down has already had an impact on the European economy. Today, the Stoxx 50, the leading European blue chip index, ended 2.5 percent lower and the borrowing rates of other countries inched up higher. Meanwhile, the S&P rating agency cut Greece’s credit rating to CCC- from CCC, further into “junk” status.
Article by Quincey Tickner