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The referendum and the Greek banks: Nowhere to get money

DAY by day the folly of the unexpected decision by Alexis Tsipras, the Greek prime minister and leader of the radical-left Syriza party, to call a referendum on the proposals made by Greece’s creditors is being exposed as the consequences are laid bare. Yesterday visibly shocked and infuriated finance ministers from the other 18 euro-zone states withdrew the deal that they (together with the IMF) were offering Greece, which would have released urgently needed bail-out funds. Today the European Central Bank (ECB) has put a cap on the amount of money that Greek banks can borrow from the Bank of Greece, the central bank in Athens. On Monday Greek citizens will wake up to find their banks closed.Since Syriza won the election of late January it has been unclear which would buckle first: the cash-strapped state or the deposit-drained banks. It now appears that they will both buckle within days. Unless a minor miracle occurs the Greek government will not repay the International Monetary Fund €1.5 billion ($1.7 billion), an amount that it is due to make by the end of the month, on Tuesday. Defaulting on the IMF is bad enough and an unwise step for any state let alone one that may lose the security blanket of the euro. But an even bigger crisis for Mr Tsipras will be shuttered banks.Since late last year when worries mounted about an early election that might bring Syriza to …

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