Cantillon: Greek central bank governor enters the fray

Some kind of a surprise is required in Luxembourg today if euro zone finance ministers are to bridge their differences with Greece. But don't count on it. As the rhetorical battle worsens between Greece and its creditors, this is more a breakdown situation than breakthrough.

Protocol.The ministers’ talks are generally preceded by meetings of the euro group working group, the body of euro zone finance officials which prepares the ground for decisions by its political masters.

There’s no such meeting today. The working group held a teleconference on Greece on Tuesday. In the absence of momentum then or since, it seems there’s nothing further to discuss. So it could get fiery alright when the ministers gather, even though there’s no draft decision on the table.

Then there is talk of people being put on standby in Brussels for emergency meetings this weekend if, as anticipated, no progress is made. Capital controls would seem to be in the offing, to slow down the bank run in Greece in the hope of preventing the implosion of its financial system.

Non-payment

Non-payment of the €1.6 billion that Greece owes the International Monetary Fund by June 30th might not constitute a default per se, but it would take Greece closer to that place.

In the immediate sense, however, the country would simply be in arrears on IMF repayments. That won't last forever, and Athens has a further €3.5 billion to pay the European Central Bank on July 20th.

Thus Yannis Stournaras, governor of the Greek central bank, has warned of an "uncontrollable crisis" if no deal is done.

He speaks of a painful exit from the euro and “most likely” the EU. Such public interventions by a national central bank chief, never lightly made, usually signal that an end point looms.

Patrick Honohan's unscheduled pre-bailout interview on Morning Ireland comes to mind. Grim.