Eurozone Bulletin: Legal implications of the Greek debt crisis
After months of political stalemate in negotiations with its creditors to unlock access to bailout funds, the Greek government has announced a referendum on proposed bailout conditions, an extended bank holiday and the imposition of capital controls. Greece now appears unable to meet scheduled payments to the IMF and other international creditors following termination of its bailout programme on 30 June 2015. These developments were triggered by substantial depositor withdrawals from Greek banks over recent weeks and have led to the ECB’s Governing Council restricting Greek banks’ access to further central bank funding through Emergency Liquidity Assistance and to speculation about what all this means for these banks and Greece’s continued participation in the eurozone.
In this Eurozone Bulletin we analyse the Greek capital controls and the practicalities of their implementation and enforcement. We discuss the practical impact the measures may have on the enforceability of contracts and the performance obligations of contractual counterparties. Finally, we consider the issues surrounding payment defaults by the Greek government, the possibility of IOUs being issued, the future of Greek banks and the potential for Greece exiting the eurozone.
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