If I had any doubts about the dire state of the Greek banking system, and why it matters so much for the Greek government to reach an agreement with creditors today to escape default, those doubts were dispelled in an interview with the chairman of Greece’s fourth-biggest bank, Nikolaos Karamouzis.
Mr Karamouzis confirmed to me that the European Central Bank (ECB) has agreed to keep Greek banks alive today.
But he warned there was a genuine risk of Greek banks being forced to close their doors tomorrow and cease dispensing cash for days, if the Greek government led by Alexis Tsipras fails today to convince eurozone finance ministers and government heads that it is taking credible steps to balance its books.
He said that because of the pace of withdrawals of cash from Greek banks by anxious savers – which he said was running at €700m (£501m) a day – all the banks can only keep going thanks to life-saving loans to them made by the Bank of Greece, with approval of the ECB, under the Emergency Liquidity Assistance (ELA) scheme.
There was a serious risk, he said, that the governing council of the ECB would end ELA, and terminate Greek banks’ full access to the eurosystem payments arrangements, if there was no sign today that Greece is back on a path to solvency.
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