The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
What is implies is that the Greek banks have for all intents and purposes already failed and the drain of cash out of Greece is impacting the current account balance. That is a process that should be stopped.
The charitable interpretation is that Bini Smaghi seems to be implying that the only eligible collateral the Greek banks have at this time is Greek debt, and were that to become worthless the Greek banks would lose access to ECB liquidity for that reason.
If either of these interpretations let alone both are correct, I think desperate corrective measures are needed, including a derogation of free movement of capital in and out of Greece. More than an outright ban, possibly a tax on outflows. This might allow Greece to restructure its banking sector without defaulting on the public debt. The situation might be hopeless, though, and then a default would follow after a complete collapse, whereas Bini Smaghi claims a collapse would follow a default.
On capital controls, see this post by Krugman and links therein.
Economics is politics by other means
by Frank Schnittger - May 23 20 comments
by gmoke - May 19 3 comments
by redstar - May 12 18 comments
by redstar - May 14 15 comments
by redstar - May 6 50 comments
by Luis de Sousa - May 1 13 comments
by talos - Apr 29 49 comments
by In Wales - May 3 1 comment
by Frank Schnittger - May 2320 comments
by gmoke - May 193 comments
by redstar - May 1415 comments
by redstar - May 1218 comments
by redstar - May 650 comments
by In Wales - May 31 comment
by Luis de Sousa - May 113 comments
by gmoke - Apr 292 comments
by talos - Apr 2949 comments
by ManfromMiddletown - Apr 245 comments
by afew - Apr 2056 comments