It is unknown what awaits the Greeks and Europe. The entire EU is in terra incognita now that the negotiations this weekend between Greece, the EU and the IMF came to a complete standstill. Tomorrow at midnight, Greece is to pay 1.6 billion euros to the IMF, money that the country doesn't have in the till. A bankruptcy is looming, but nobody knows what will happen exactly.
Greece will technically go bankrupt if the money isn't paid tomorrow night. Borrowing becomes impossible then. The banks will remain closed all week, and payment transactions are limited. The banks are taking this measure to prevent too much money from being diverted or withdrawn. The Greek Central Bank has taken measures to prevent a capital flight abroad. For withdrawing cash money, there's a limit of 60 euros per day per account.
Greek problem is euro problem?
It is unclear when the banks will open again, as well as the currency that will come out of ATMs then. Will they still be euros? Or will Greece re-introduce the drachma? With the latter choice, Greece will have full control over the currency again, which they relinquished by introducing the euro. Countries can tackle a crisis in three ways: devaluation of the currency, lower interest rates or providing fiscal boosts (allowing the national debt to rise). These three measures are unattainable for the Greeks. It's the ECB that has a say in these policy measures. The Wall Street Journal expounded this basic problem of the euro, for which there's still not effective solution, in an article.
A low drachma exchange rate would provide an export advantage for Greek companies, although the 'ordinary Greek' will of course be hit hard. Next Sunday, the Greeks are allowed to vote on the emergency aid package proposed by the ECB. The proposal by Greek President Tsipras was the direct cause for the negotiations to fail.
