Greece working with ECB to deal with banking crisis: FM

LONDON, United Kingdom – Greece will work with the European Central Bank on formulating a response to the cash crisis facing its banks before they are due to open on Monday, Finance Minister Yanis Varoufakis said Sunday.

Speaking shortly before an emergency gathering of Greece’s systemic stability council, he declined to say whether the government intended to introduce capital controls.

“This is a matter that we’ll have to work overnight on with the appropriate authorities both here in Greece and in Frankfurt,” Varoufakis told the BBC in an interview.

“It is our view that a monetary union that cannot guarantee functioning banks… constitutes a major denial of the very principle of a monetary union.”

Pressed again on capital controls, he said: “You will allow me, sir, as a minister of finance together with the Bank of Greece and the European Central Bank to work out what can be done to minimise the burden on our people from Europe’s refusal to grant us basic democratic rights.”

After talks in Brussels broke down in acrimony Saturday between Athens’ left-wing leaders and the rest of the eurozone, Greece is hurtling towards a default with its EU-IMF creditors.

The ECB refused Sunday to increase emergency cash available to Greek banks despite a bank run being underway, but did not shut it down either.

Prime Minister Alexis Tsipras stunned Europe with a surprise call for a July 5 referendum on the latest cash-for-reforms package and advised voters against backing a deal that spells further “humiliation”.

Exasperated eurozone members, suspecting a further play for time, responded by refusing to extend the EU’s critical financial lifeline beyond a Tuesday deadline.

This will almost certainly mean Greece will default on more than 1.5 billion euros ($1.7 billion) due to the International Monetary Fund on Tuesday.

Varoufakis said it was “a dark hour for Europe” but blamed Greece’s international creditors for failing to compromise.

“We know that we have bent over backwards to accomodate the institutions, the troika, our European partners. They have not come to the party, they have not met us half way, not even a quarter of the way,” he said.

“Now we’re looking on these developments with a great deal of sadness on what has happened to the Europe that we signed up to.” – Rappler.com/AFP