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Forex: ECB tightens noose

Capital controls are unlikely to be lifted for some time unless a deal can be agreed upon in the next day or so. The ECB has tightened up collateral rules for Greek banks to access its ELA and Merkel and Hollande made it clear yesterday that it is now up to Greece to come forward with new proposals since previous ones are redundant, regardless that last week end’s referendum was a question relating to the last deal on the table before the latest bailout expired. Today’s summit will put Greece and its creditors at loggerheads making it difficult to secure a third bailout, meanwhile in the background work is being done to prepare for a Grexit, the chances of which have dramatically risen in the last 48 hours.

Talk is of 20th July being the next big deadline for Greece when €3.5b is due back to the ECB, but at this rate things could be over well before then. Even before talks have recommenced, the Eurogroup has made it clear that they expect Greece to initiate discussions with a new reform package, hardly what one would consider as an olive branch. Any new measures put forward by Greece will include debt forgiveness, a red line for creditors, so if that red line remains in place then a deal is highly unlikely and the exit door will be swung wide open.

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