Greece handed reform plan ultimatum as new finance minister takes office
Leaders from Germany and France urged Athens to come up with new proposals late on Monday, following the country's referendum vote against previously proposed bailout conditions.
Read more: Greeks back government by voting 'no' to bailout conditions
Greece will have to present a new reform plan to the Eurozone leaders by Tuesday night.
We say very clearly that the door for talks remains open
"We say very clearly that the door for talks remains open and the meeting of Eurozone leaders tomorrow should be understood in this sense," German Chancellor Angela Merkel said.
“The preconditions for entering into negotiations over a new aid programme do not currently exist,” said Steffen Seibert, spokesman for Merkel.
A German Finance Ministry official ruled out that Berlin would concede debt relief to Greece. The French President François Hollande also encouraged Greece to offer “serious, credible proposals” adding that the country needed “a long-term perspective in the eurozone with stable rules, as the euro zone itself does”.
ECB to maintain ELA for Greece
The European Central Bank (ECB) decided on Monday to maintain the cap on emergency liquidity assistance (ELA) to the Hellenic nation at €89bn, the same level decided on 26 June 2015 after discussing a proposal from the Bank of Greece.
Read more: ECB said to leave Greek bank's ELA ceiling unchanged
Nevertheless, the ECB adjusted the haircuts it applies to the assets which Greek banks hand over in return for funds.
Greek banks will remain closed at least a couple of days more, and capital controls are expected to remain in place, with ATM withdrawals limited to €60.
Read more: Greek banks to remain shut for a week
New finance minister after Varoufakis resigned
The chief negotiator in aid talks with international creditors, Euclid Tsakalotos, was appointed as new Greek finance minister, after Yanis Varoufakis resigned on Monday, claiming that other eurozone leaders had demanded his removal.
I am not taking on this job at the easiest point in Greek history
"I cannot hide from you that I am quite nervous. I am not taking on this job at the easiest point in Greek history," Tsakalotos said in a news conference.
Meanwhile, a spokesman for Greece's left-wing Syriza party, Stavros Karagounis, announced that Varoufakis would remain a part of Greece's negotiating team despite having decided to step down from his post.
Read more: Varoufakis steps down but will remain on negotiating team
Analysts comment
Berenberg's analyst Nick Anderson emphasised that events in Greece showed that European institutions were not permanent, pointing out that “risks have thus been under-priced by the market.”
Anderson also commented that assuming no contagion was naive.
London Capital Group's Jonathan Sudaria pointed said given that Merkel is facing huge domestic pressure to cut Greece loose, and that Alexis Tsipras is emboldened by the referendum, “the odds of a deal being struck look slim to none.”
“The key question remains, is Mr. Tsipras just a symbol of rebellion, like a poster on a student dormitory wall, and so about to concede to the ‘grown up’ demands of his creditors - or is he prepared to have his name go down in future text books for a whole different reason?,” asked Rabobank analysts.
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