Friday, July 3, 2015

Fearing return to drachma, some Greeks use bitcoin to dodge capital controls

JUL 3, 20157:57 PM

[LONDON] There is at least one legal way to get your euros out of Greece these days, to guard against the prospect that they might be devalued into drachmas: convert them into bitcoin.

Although absolute figures are hard to come by, Greek interest has surged in the online "cryptocurrency", which is out of the reach of monetary authorities and can be transferred at the touch of a smartphone screen.

New customers depositing at least 50 euros (S$74.76) with BTCGreece, the only Greece-based bitcoin exchange, open only to Greeks, rose by 400 per cent between May and June, according to its founder Thanos Marinos, who put the number at "a few thousand". The average deposit quadrupled to around 700 euros.

Using bitcoin could allow Greeks to do one of the things that capital controls were put in place this week to prevent: transfer money out of their bank accounts and, if they wish, out of the country.

"When people are trying to move money out of the country and the state is stopping that from taking place, bitcoin is the only way to move any value," said Adam Vaziri, a board member of the UK Digital Currency Association. "There aren't any other options unless you buy diamonds, and that's very difficult to move."

But Mr Marinos said the bitcoin buyers' main aim was to shield their money against the prospect that Greece might leave the euro zone and convert all the deposits in Greek banks into a greatly devalued national currency. If voters reject the demands of international creditors in a referendum on Sunday, this becomes much more likely.

"A lot of people are keeping all the bitcoins they buy on our platform, until they understand what to do with them," Mr Marinos said. "In their eyes, now they have bitcoins, they're safe."

That said, the value of a bitcoin, a web-based digital currency invented six years ago that floats freely and is not backed by a government or central bank, has been highly volatile.

It peaked at over US$1,200 in late 2013 before crashing almost 70 per cent in less than a month after a hacking attack on the Tokyo-based bitcoin exchange Mt Gox in early 2014.

This week, as Greece defaulted on a debt to the IMF, the price jumped to a 3-1/2-month high of US$268 on the Bitstamp exchange - up more than 20 per cent since the start of June - while the number of daily transactions reached a record 150,917.

Most bitcoin-watchers reckon the digital currency's rise is mostly due to speculators betting that capital controls would trigger heavy demand. In March-April 2013, when Cyprus clamped down on bank withdrawals, bitcoin rocketed almost 700 per cent.

Coinbase, one of the world's biggest bitcoin wallet providers, which is not currently accessible to Greeks, said it had seen huge interest from Italy, Spain and Portugal.

It said the average daily sign-ups from euro zone countries had increased 350 per cent since the start of June. Average daily bitcoin purchases from the euro zone this week were up 250 per cent compared with June's average.

On June 20, Greece got its first bitcoin "ATM", in a family-run bookstore in Acharnes on the outskirts of Athens.

There, if they had them, customers could insert euros and in return receive bitcoin at the current exchange rate, which they would scan into an electronic "wallet" on their smartphones.

But with Greeks having to form long queues at bank ATMs just to receive a meagre 60 euros' cash a day, this machine has seen no customers since talks with creditors broke down on Saturday.

"Before Saturday, there was some very limited interest, mostly customers asking what it does and how it works," said Maria Varila, an employee in the shop. "Since Saturday, however, when all hell broke loose, there has literally been zero interest."

REUTER
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Eurozone rescue fund reserves right to call in Greek loans

JUL 3, 20158:22 PM

[BRUSSELS] The eurozone's rescue fund, Greece's largest creditor, said on Friday it reserved the right to call in 130.9 billion euros in debt ahead of schedule after Athens defaulted this week on an International Monetary Fund loan.

The board of the European Financial Stability Facility decided to reserve its rights to act at a later stage on the outstanding loans to Greece, an EFSF statement said.

The decision was announced two days before Greeks vote in a referendum on whether to accept bailout terms rejected by their leftist government. European officials have said a "No" vote could lead to the country's exit from the eurozone.

The EFSF's chief executive, Klaus Regling, made the recommendation rather than the two other options - waiving the debt or demanding immediate repayment, which would have forced eurozone governments to take large losses.

"This event of default is cause for deep concern," Mr Regling said in an EFSF statement. "It breaks the commitment made by Greece to honour its financial obligations to all its creditors and it opens the door to severe consequences for the Greek economy and the Greek people."

On June 30, Greece failed to pay 1.6 billion euros due to the IMF, a non-payment which could "constitute an event of default for certain EFSF loans," the EFSF said in a statement on July 1.

REUTER
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Some would exploit Greek 'no' to take apart Europe: Moscovici

JUL 3, 201510:12 PM

[BRUSSELS] A 'no' vote in Sunday's Greek referendum on debt bailout talks would send a negative signal and be exploited by people who want to dismantle Europe, the EU commissioner in charge of economic affairs, Pierre Moscovici, said on Friday.

Two days ahead of the vote, Mr Moscovici campaigned for a 'yes' of the Greeks to the international creditors' rescue programme.

In a long post in his personal blog, Mr Moscovici underlined that a 'no' vote "would send a negative message to the rest of Europe" that "some would too easily exploit to take apart our common house", he wrote in French.

He said a 'yes' vote, on the other hand, would "facilitate talks" and would create "common ground" to resume negotiations with the Greeks.

REUTERS

Greek banks have 1 bln euro liquidity: association

JUL 3, 201510:38 PM

[ATHENS] Greek banks have a "liquidity cushion" of 1 billion euros but funds beyond Monday depend on the European Central Bank, the head of Greece's banking association said on Friday.

Greeks banks were shuttered on Monday for a week after the collapse of negotiations on a new aid deal to keep the country afloat, triggered by a government decision to call a referendum on the bailout terms.

"Liquidity is assured until Monday, thereafter it will depend on the ECB decision," Louka Katseli told reporters.

"The liquidity cushion we have is about 1 billion."

REUTERS

For many Greeks abroad: "transaction cannot be approved"

JUL 3, 20159:08 PM

[LONDON] Life was already tough for Vassilis, who left Athens last month to seek work in London with around 2,000 pounds in his pocket, as he failed to land a job as quickly as he had hoped.

In the past few days it has got a lot tougher. He has money in his Greek bank account, but a 60 euro cap on bank withdrawals imposed last weekend means he cannot access it without the high fees for each small amount eating up his savings.

Having spent more than half of his cash on accommodation, food and travel, the 38-year-old electronics engineer is now in a race against time to establish a foothold in England before he has to use up the last of his banknotes on a plane ticket home.

"These people in Greece have destroyed me," he said, declining to give his full name. "If they don't raise the limit on cash withdrawals, I can't continue to live here, and I want to live here in England because I want to find a job," said Vassilis, who quit his homeland after being unemployed for years.

Long lines have formed at cash machines in Greece since banks closed on Monday and in Britain, where thousands of Greeks have come to work, study or visit family and friends, many say their debit and credit cards have failed in ATMs or when they try to buy online.

A Greek foreign ministry document dated June 30th, sent to Greek embassies and seen by Reuters, suggested authorities were trying to mitigate the impact of capital controls on Greeks abroad, particularly students and tourists.

But days later many were still encountering ATM messages such as, "The selected transaction cannot be approved at this time. Please contact your card issuer." For others, even the most inexpensive and essential online transactions have failed to go through.

Katerina Kyrgiou, 24, who came to England the day after Prime Minister Alexis Tsipras announced a snap public vote on the last cash-for-reforms offer from Greece's creditors before its bailout ran out, said she was unable to use her Greek bank card to book a fare.

"I tried the day before yesterday to buy a coach ticket for 15 pounds from Nottingham to London and the website wouldn't let me," she said.

She had sought to withdraw cash on Saturday from Athens airport before leaving for England to visit a friend but the cash dispensers had run dry. "I have to be very careful and I'm worried because if you run out of money, then what are you going to do?" she said.

The Greek consulate in London said only a handful of people had contacted them in recent days with such problems but they had helped one boy who missed his flight and was unable to use his Greek card to rebook a flight home.

In the end his parents had to find the cash and pay at Athens airport.

Many Greeks are having to rely on the support of friends and family.

Dimitri Augustidis, 45, told Reuters that the night Tsipras announced the referendum, two friends of his ran into difficulties in the Northern Irish city of Londonderry, where they had arrived a week earlier to look for work.

"They arrived at the worst possible time, they only had 40 pounds on Friday night ... after having paid for the hotel deposit, the first night there and other costs," he said.

Mr Augustidis transferred money from his account to that of the hotel owner, asking her to give the amount in cash to his friends.

Vassilis is now in Birmingham after failing to find work in London. As the clock ticks down to Sunday's referendum and the Greek government urges voters to reject the creditors' offer, he reflects the helplessness felt by many overseas Greeks who can neither vote from abroad nor return home but have their destiny tied to the fate of their nation of 11 million people.

"If I were in Greece I might have even voted 'No'," he said. "I can't vote either 'Yes' or 'No' at this point but I'm trying to look after myself."

REUTER
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Not interested in being PM, says Tharman

Kelly Taykellytay@sph.com.sg@KellyTayBT

JUL 3, 20153:31 PM

IT'S just a matter of time before Singapore sees a prime minister from a minority race, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Friday - but it won't be him, as he is not interested in the job.

His interests aside, Mr Tharman added that such a move would not be necessary, since Prime Minister Lee Hsien Loong is fortunately very healthy, and also because there is already a group of younger candidates waiting in the wings.

This crop of people - those already in the fray, and those entering it - will provide Singapore's future leadership, said Mr Tharman.

Mr Tharman was speaking at an SG50+ conference themed "Singapore at 50: What lies ahead?", jointly organised by the Institute of Policy Studies and the Lee Kuan Yew School of Public Policy.

At the event, Mr Tharman engaged in a more than an hour-long dialogue moderated by American journalist and author Fareed Zakaria.

Tsipras dismisses Europe's warnings to Greece on vote

JUL 3, 201510:47 PM

[ATHENS] Prime Minister Alexis Tsipras rejected European warnings that Greeks will be deciding on their future in the eurozone in a referendum on Sunday, saying negotiations would continue for a better deal with international creditors after the vote.

In a televised address on Friday, Mr Tsipras said a report by the International Monetary Fund which arguing that Greece's massive public debt could not be sustained without significant writedowns vindicated his advice to reject the lenders' terms.

Repeating his assault on European partners he accused of blackmailing and issuing ultimatums to Greece, the leftist leader called for calm ahead of Sunday's ballot, as two opinion polls showed the 'Yes' and 'No' camps neck-and-neck.

"On Sunday what is at stake is not Greece's membership of Europe, what is at stake is whether blackmail will lead us to accept the continuation of a policy which the lenders themselves recognise is a dead end," he said. "On Sunday what is at stake is whether we will give our consent to the slow death of the economy."

European policy makers fired fresh warnings of the costs of a 'No' vote in a plebiscite called at just eight days' notice after the breakdown of talks with the European Commission, the IMF and the European Central Bank.

Commission President Jean-Claude Juncker and German Finance Minister Wolfgang Schaeuble dismissed Mr Tsipras' version that his government would be able to move smoothly to negotiate more favourable terms if Greeks backed his rejection.

"If the Greeks will vote 'No', the Greek position is dramatically weakened," Mr Juncker told a news conference.

Mr Schaeuble, a hate figure for Greek opponents of austerity policies, told Bild newspaper: "Greece needs reforms. But I already know now: These would be very difficult negotiations."

Mr Tsipras is betting Europe will compromise rather than let Greece slip out of the eurozone, even though the continent's leaders say a "No" vote would signal its exit.

But behind the rhetoric, there were more concrete signs of the pressure Europe can exert on Greece.

The eurozone's rescue fund, Greece's largest creditor, said it was reserving the right to call in 130.9 billion euros of debt ahead of time after Athens defaulted on an IMF loan.

One poll by the respected ALCO institute, published in the Ethnos newspaper on Friday, put the 'Yes' camp on 44.8 per cent against 43.4 per cent for the 'No' vote. But the lead was well within the pollster's 3.1 percentage point margin of error, with 11.8 percent saying they are still undecided.

Another survey for Agvi newspaper put the 'No' fractionally head with 43 percent to 42.5 percent for the 'Yes' and 9 percent undecided.

Given a volatile public mood and a string of recent election results that ran counter to opinion poll predictions, the result is in effect completely open.

With banks shuttered all week, cash withdrawals rationed and commerce seizing up, the vote could decide whether Greece gets another last-ditch financial rescue in exchange for more harsh austerity measures or plunges deeper into economic crisis.

There has been little time for campaigning but Tsipras is due to address a mass rally of 'No' supporters in Athens'central Syntagma Square outside parliament on Friday evening, while 'Yes' campaigners plan a rally at the old Olympic Stadium.

Mr Tsipras opponents have pointed to the fact that the referendum is on a deal that is no longer on the table accusing him of recklessly endangering the country's future.

The 'No' campaign has directed much of its venom at Germany, the eurozone's dominant power and Greece's biggest creditor.

One poster plastered in central Greece shows a picture of German Finance Minister Wolfgang Schaeuble with the slogan: "For five years he's been sucking your blood. Tell him NO now."

The Council of State, Greece's highest administrative court, is to decide on the constitutionality of the referendum at a hearing on Friday. The Council of Europe, a pan-European democracy and human rights watchdog, has said the vote does not meet its minimum standards.

Two Greek citizens are seeking the suspension of the vote as unconstitutional and illegal, arguing that it was called at too short notice, that the constitution bars questions relating to fiscal policy, and that the question is too complex.

The IMF warned on Thursday that Greece faces a huge financial hole regardless of the outcome of the referendum and would need some 50 billion euros as well as a massive debt writedown.

The assessment, in a preliminary draft of the Fund's latest debt sustainability report, underlined the scale of the problems facing Athens, whatever government ends up dealing with them.

Mr Tsipras may not survive long if voters ignore his call to vote 'No'. But even if European leaders are willing to sit down immediately with an Athens government, it may be several weeks before a new bailout is sorted out, European Commission Vice-President Valdis Dombrovskis told Germany's Die Welt daily.

Any decision on whether to reopen the crippled banks will depend on whether the European Central Bank is ready to restore the emergency funding they need to stay afloat.

That is far from certain as ECB Governing Council member Vitor Costancio made clear when asked whether funding would be restored.

"I cannot in advance answer that question," he said, adding that a 'No' vote would make agreement difficult. "If the result will be a 'Yes', then it's the opposite: it seems it will be easier to reach an agreement," he said.

Greece's European partners have made clear they regard the vote as a choice of whether Greeks want to stay in the euro, even though its exit would change the nature of a 15-year-old currency union intended to be unbreakable.

But as the deadline approached, some officials appeared to recognise that after five years of bailout-imposed austerity, even those Greeks who intend to vote 'Yes' have little appetite for yet more advice from abroad. "It's for Greeks to decide," said Jeroen Dijsselbloem, chairman of the Eurogroup of euro zone finance ministers when asked by reporters how Greeks should vote.

"It's important for Europe, but important above all for Greece."

If voters back a bailout plan the government has scorned, Tsipras and Finance Minister Yanis Varoufakis have said they would quit. That would lead to a scramble to either try to put together a national unity government to negotiate a loan deal or call new elections by September.

Already, Mr Tsipras' coalition is under strain as a succession of deputies from the right-wing Independent Greeks, his junior partners, have backed the 'Yes' vote.

Mr Varoufakis, who alienated many eurozone colleagues with his economic lectures and outspoken style, said the IMF's report vindicated Greece's demands to put debt relief at the centre of the negotiations.

"It is music to our ears because what we have been saying right from the beginning is that the great, big reason why we have a huge crisis here in Greece is because our debt is unsustainable," he told Irish radio.

REUTERS

Update: Greek PM defends vote, demands 30% debt haircut

JUL 3, 201510:19 PM

[ATHENS] Greece's Prime Minister Alexis Tsipras on Friday defended a weekend referendum he hopes will reset bailout negotiations and demanded creditors forgive a third of the country's debt and allow delayed repayments for the rest.

Sunday's plebiscite is "a time of responsibility and democracy meant to silence the sirens of destruction," Mr Tsipras said in a national television address.

He rejected EU leaders' assertions that his decision last week to curtail debt talks with the creditors - the International Monetary Fund, the European Commission and the European Central Bank - and call the vote risked Greece's eurozone or EU membership.

"Rejecting an unsustainable agreement does not mean a break with Europe," he said.

"We will face a common future on Monday and we will not allow anything to divide us."

Mr Tsipras, who leads the radical left Syriza party that governs Greece in a ruling coalition, called for creditors to accept "a 30 per cent haircut" on the country's massive mountain of debt.

He said he also wants a 20-year "grace period" on repaying the rest.

The country's total debt load stands at a staggering 323 billion euros, three-quarters of it owed to its 'troika' of creditors.

AF
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Greece declared in default ahead of knife-edge referendum

JUL 3, 20159:05 PM

[ATHENS] Greece was officially declared in default on Friday, injecting even more urgency into a make-or-break weekend referendum that new polls suggested was too close to call.

The fund providing Greece's financial lifeline declared "an event of default by Greece".

The European Financial Stability Facility added, though, that it had decided to not immediately demand repayment of its loans - a step that analysts say could have triggered sudden "Grexit", or Greece's exit from the eurozone.

The news will come as a fresh shock to Greece's 11 million people, and will hang over two major, rival rallies taking place in Athens late Friday seeking to galvanise 'Yes' and 'No' support for Sunday's referendum.

Stakes were already high before the EFSF announcement, with EU leaders warning a 'No' in the plebiscite would jeopardise Greece's place in the 19-nation eurozone.

But Greek Prime Minister Alexis Tsipras rejects that, insisting a 'No' result would strengthen his hand and force international creditors withholding bailout funds to drop "humiliating" austerity terms.

Only a last-minute challenge to the legality of the ballot in Greece's top administrative court, the Council of State, might be able derail it. The court is to give its ruling Friday.

Confusion, however, is widespread over the very technical question posed in the referendum.

That, and capital controls that have reduced Greeks to lining up at ATMs to make daily withdrawals capped at 60 euros ($67), has prompted many who formerly supported the government to swap sides.

The two latest polls published Friday showed voter intentions were effectively tied.

An Alco institute poll found 44.8 per cent of Greeks intend to vote 'Yes' and 43.4 per cent are for 'No'. A Bloomberg survey for Greece's Macedonia University was equally split, showing 43 per cent to vote 'No' and 42.5 per cent 'Yes'.

European Commission chief Jean-Claude Juncker warned that Greece's negotiating position with creditors would be "dramatically weakened" in the event of a 'No'.

Even if the 'Yes' vote wins, there would still be "difficult" negotiations ahead, he added.

Greek voters, however, are confronted with a referendum question that has stumped many.

The question reads: "Should the deal draft that was put forward by the European Commission, the European Central Bank and the International Monetary Fund in the Eurogroup of June 25, 2015, and consists of two parts, that together form a unified proposal, be accepted? The first document is titled 'Reforms for the Completion of the Current Programme and Beyond' and the second 'Preliminary Debt Sustainability Analysis'."

Eurozone officials have firmly said that the "deal" referred to expired on Tuesday - the same day Greece failed to repay a 1.5-billion-euro repayment to the IMF, becoming the first developed country to ever do so.

On July 20, Greece looks likely to be unable to repay another 3.5 billion euros owed to the ECB.

Some voters who initially backed the government have swapped sides ahead of Sunday's ballot.

"I was going to vote 'No' because I think the Greek people are being treated with contempt. But Mr Tsipras has made the situation so much worse, it's his fault the banks are closed," said an Athens shop assistant Suzanna Alizoti.

Greek pensioners without bank cards have been limited to one 120-euro over-the-counter withdrawal, prompting despair among many.

In Greece's second-biggest city of Thessaloniki, one retired man unable to withdraw his 120 euros crumpled to the ground, scattering his papers. A bank manager quickly resolved the problem.

In Athens, another pensioner, Kostas, was regularly withdrawing his and wife's daily euro limits from ATMs for fear they might be seized by the government or converted to drachmas.

"My money is safer at home," he said.

Many cash machines were running short of denominations, allowing only the withdrawal of a 50-euro note.

Mr Varoufakis has said he would step down as finance minister if a 'Yes' vote carried the day, and the rest of the government "may very well" do the same.

But Mr Tsipras has been ambiguous, telling Greek television late Thursday he would respect the referendum's result and take the necessary steps "set out in the constitution".

As the clock ticked down to the fateful vote, the IMF on Thursday said Greece would need 60 billion euros more in bailout money to get through the next three years. It also cut the country's 2015 growth forecast to zero from 2.5 per cent.

Europe's main stock markets slipped during Friday trade as all eyes were riveted on Greece's referendum and what that might mean to investors at the beginning of next week.

"The vote seems tight," said VTB Capital economist Neil MacKinnon.

"A 'No' vote increases the chances of a Grexit as the ECB would pull the plug on the Greek banks," he said.

"A Yes vote results in the resignation of the Greek government though it is not clear that this would necessarily result in a more creditor-compliant Greek administration that would sign up to the creditors' proposals quickly."

AFP

Friday, July 3, 2015