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Greek banks to reopen following Eurozone bailout

20/07/2015

Greek banks are starting to reopen after an agreement was reached with Eurozone creditors to extend their debt agreement.

The Greek government has been in deadlock with their creditors over the last three weeks, as they threatened to default on their €320bn debt.

However, a new agreement has been reached, allowing the country to avoid defaulting on their debts and being forced out of the Eurozone.

As part of the agreement, the Greek credit line has been extended, but they have also been forced to agree to reforms that will enforce austerity on the Greek economy. These agreements have been made in order to help avoid a future debt default and a subsequent exit from the Eurozone.

The reforms mean that Greeks will pay more for goods and services such as restaurants and taxis, as VAT will be increased from 13% to 23%.

As a result of the agreement banks are now starting to reopen, whilst restrictions on individual daily withdrawal limits have been lifted.

However, several restrictions have been left in place in order to avoid a run on Greek banks. These restrictions include a block on cashing cheques or transferring money abroad, whilst a weekly withdrawal cap of €420 is also replacing the €60 a day cap.

Tough stance



Both Greece and the International Monetary Fund (IMF) are pushing for a restructuring of the €320bn debt, but German chancellor Angela Merkel has refused to sanction a reduction in the debt.

However, despite ruling out such concessions, the German chancellor has hinted that help could be provided in the form of decreasing interest rates or extending maturities.

Germany holds the key in terms of an agreement on debt renegotiations, as they are the biggest single creditor to Greece. It is for this reason, that the chancellor has taken a particularly tough stance on the issue, in order to avoid losing German taxpayers money.

There are also signs of unrest in the German government, as some have suggested that Ms Merkel and the German finance minister Wolfgang Schaeuble no longer agree with each other on the issue.

These suggestions were made after Mr Schaeuble stated that he would rather resign than ‘defend something he did not believe in’, in an interview with a German magazine about the Greek debt negotiations.

Ms Merkel refuted these suggestions by stating: "The finance minister will, like me, conduct these negotiations and I can only say that no-one came to me and asked to be relieved."



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