Athens Scrambles To Shore Up Central Bank Reserves; Local Municipalities Upset Over Decree From Athens

SYRIZA

Greek newspaper Kathimerini reports today that authorities from Greece’s local municipalities will hold an emergency meeting on Tuesday one day after Greek Prime Minister Alexis Tsipras issued a decree  that reserves from local governments and state enterprises are to be transferred to the central bank in Athens to help pay Greece’s international creditors and avoid default.

Athens Mayor Kaminis said his municipality would argue that the decree was unconstitutional while other mayors have told media sources that they will appeal the order in court.

Bloomberg reported the decree from Greek Prime Minister Tsipras to confiscate local reserves held in commercial banks and transfer them to the Bank of Greece could raise as much as €2 billion, although the money is needed to pay pensions and salaries at the end of the month.

Yesterday Vice President Vitor Constancio told EU lawmakers yesterday that a Greek default doesn’t mean that Greece will have to give up its euro membership.

Yields on Greece’s short term bonds have spiked in recent days as Athens scrambles to pay off its looming debts in early May and Greece’s leftist leaders draw red lines around proposed reform measures that are still upapproved.

Media sources have reported that ECB staff is now proposing to increase the haircut on Greek bank collateral that is used in exchange when borrowing from the Bank of Greece through Emergency Liquidity Assistance (ELA), although this proposal wasn’t discussed by the ECB’s Governing Council.

-Johnathan Schweitzer

 

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