EuropeanJul 6 2015

Greece set to present new bailout proposals tomorrow

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Greece set to present new bailout proposals tomorrow

Greece is set to present new bailout proposals to the EU at a summit tomorrow (7 July), in the first signs of engagement since the ‘no’ referendum result over the weekend.

FTAdviser’s parent paper the Financial Times reports that a Greek government spokesman agreed in a phone call with German chancellor Angela Merkel earlier today (6 July) that prime minister Alexis Tsipras would present the proposals at an EU summit in Brussels.

A spokesman for the German leader stated that it was up to Greece to explain how it will stay in the euro, following the voters’ rejection of reforms and austerity demanded by creditors.

“Greece is a member of the euro. It is up to Greece and its government to act so that this can remain the case,” read a statement, which added “it depends now on what proposals the Greek government puts on the table.”

The markets dipped on the weekend’s news, with the euro at a session low of $1.0970 during early Asia trading, although it rallied to $1.1095 shortly after the news of minister of finance Yanis Varoufakis’ resignation.

Valentijn van Nieuwenhiujzen, head of multi-asset at fund manager NNIP, commented that there will be three elements to watch in the European Central Bank’s policy response.

“The way the Emergency Liquidity Assistance is managed (to what extent will it remain open for Greek banks), the application of haircuts to the collateral that Greek banks need to post at the ECB and new measures to tackle liquidity issues in other parts of European financial markets.

“The balance between these three potential ECB measures will be crucial for the sentiment in financial markets and, thereby, the degree of damage to the European economy.”

peter.walker@ft.com