So, Grexit may be in progress, or not. Katharine Morton, Editorial Director of EuroFinance comments on the events as they unfold.
"The European Central Bank has turned off the liquidity tap. Well, not quite. The ECB’s €89 billion facility is still in place and that’s plenty enough for daily commercial transactions. The banking system is, in technical terms, still sound for payments. Banks won’t lend but who ever borrowed from a Greek bank? Capital controls will stop excess cash from being taken out but who, in this ever going never ending crisis of brinkmanship, kept free cash in a Greek bank? Money comes into Greece through invisible earnings (tourism mostly and other services) and its physical exports are made through trading companies. Local producers make olive oil and wine through cooperatives and the traders pick up the processed stuff and take the proceeds.
Treasurers need have no worries about Greece.
But what about contagion? Will the other PIGS (Portugal, Ireland – or Italy, Greece, Spain) go the same way? Not a chance. They have made their unpopular reforms and there’s a sense they are smiling at the way things have gone.
To quote Shakespeare's Hamlet: “What’s Hecuba to him or he to Hecuba, That he should weep for her?”
Need further insight into how political and economic events will impact treasury?
Join the global treasury community in Copenhagen on 23-25 September at EuroFinance's flagship conference. José Manuel Barroso and Zanny Minton Beddoes, Editor of The Economist, will discuss how Europe is at a turning point and will share their views on how (and whether) it can get fit and compete again.