Closed Live – Greece votes no, what next?

After delivering a decisive No vote in Sunday’s referendum, in which voters backed Athens’ call to reject a compromise with international creditors, Greece is facing the prospect of even greater turmoil as it tries to tries to prevent the collapse of a financial system that is rapidly running out of cash.

Prime minister Alexis Tsipiras has said he is ready to resume talks immediately, while politicians and officials in the rest of the eurozone are holding a series of meetings to decide what to do next.

Key developments so far:

● Greek PM Tsipras will present fresh bailout proposals at the EU summit on Tuesday
● Greek finance minister Yanis Varoufakis quits and is replaced by Euclid Tsakalotos, previously the coordinator of negotiations with Greece’s lenders
● Markets remain relatively unruffled after No vote
● ECB governing council increases the haircut on the collateral posted by Greek banks in exchange for emergency liquidity

Good morning to you on the day after the night before. Amid all the questions about what might happen next to Greece and whether it still has a future in the eurozone and indeed in the European Union, one thing is clear: Greece is getting a new finance minister. Yanis Varoufakis the scourge of his fellow finance ministers in the eurozone has resigned.

The market reaction was immediate, reports Jamie Chisholm, the FT’s Global Markets Commentator. His surprise resignation has given markets, which were distinctly in “risk off” mode, a bit of a fillip with the euro easing some of its losses against the dollar.

Analysts at Citi have coined a new term for the current situation: Grimbo or Greece in limbo. As they pointed out in an early note any eventual exit from the eurozone is still some time off:

The No vote implies Grimbo (Greece in limbo) is a near-certainty and Grexit (Greece Eurozone exit) risk has risen. But even then, formal Grexit could still take months or even years to happen

We’re not sure if any of the other eurozone ministers have dartboards but if they do, they can take this picture down:

The now ex-Greek finance minister certainly didn’t hold back when he announced his resignation on his own blog:

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.


We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

Reuters reports a Greek government spokesman has said a meeting of political leaders started at 10am Athens time (0800BST; 0900CEST) to agree on a successor to Varoufakis. Some of the possible contenders cited in Greek media to replace Varoufakis include Euclid Tsakalotos, the coordinator of negotiations with Greece’s lenders, and Economy Minister George Stathakis.

Meanwhile elsewhere in the eurozone today, these are the conference calls/meetings that we know are scheduled to take place:

The heads of the European Commission, European Central Bank and eurogroup of finance ministers will hold a conference call on Monday morning.

Then at some point this afternoon, the ECB governing council will hold a conference call to discuss whether to approve an increase in emergency loans to Greece.

And this evening will see a meeting between Germany’s Angela Merkel and France’s François Hollande to discuss the response to the Greek vote

While Varoufakis’ resignation may have caught the attention, let’s not forget that the mood in the rest of the eurozone was pretty dark after the No vote.

Last night, Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup committee of his counterparts, warned:

This result is very regrettable for the future of Greece. For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities.

Sigmar Gabriel, deputy German chancellor, had also warned on Sunday that Mr Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise”.

He told Tagesspiegel newspaper:

With the rejection of the rules of the eurozone . . . negotiations about a programme worth billions are barely conceivable.

While French Finance Minister Michel Sapin, in line with Paris’ more concilliatory tone, told French Europe 1 Radio on Monday morning:

In this risk for Greece, there is a risk of leaving the euro but there is no automatic exit, in the same way that the vote doesn’t mean automatically that Greece stays in the euro. What will determine whether it stays or leaves is the quality of negotiations that will start

If having won back their pride they can return to negotiations, so much the better … It is up to the Greek government to make proposals now

Sapin dodged the question whether whether François Hollande, who spoke to Greek Prime Minister Alexis Tsipras late on Sunday, called for the resignation of finance minister Yanis Varoufakis. Sapin said such decisions were for Tsipras.

How do you say plus ça change in Greek? The FT’s Henry Foy reports that the No victory brought no miracle cure, as Monday morning heralded more queues and shuttered doors at ATMs in Greece

At one road junction in the city’s commercial district, 37 people queued at 10am outside three ATMs, hoping to get their daily limit of €60 before the cash runs out.

And he has just sent this familiar looking picture from Athens:

Ciaran O’Hagan, head euro are rates strategy at Société Générale, says the big question now for markets is whether euro area authorities can stoke up the courage to instruct the European Central Bank to cut off emergency liquidity assistance to Greece. He also warns any split between Germany and France on how to deal with the crisis would be extremely damaging:

Such a move is not for a couple of days yet … if at all. A Eurogroup [finance ministers] meeting has been called for Tuesday to prepare for a heads of state summit that evening. So any action is not until Wednesday at the earliest, and quite possibly none if countries looking to avoid a crisis have their way.

France however is pushing hard for the euro area to accommodate Greece (with the Socialist grouping in the EU parliament echoing such sympathies). So far France and Germany have managed to maintain a coordinated line, and the impression of some unity. We will particularly watch to see if they can keep up this front: any disunity would prove very destabilising, going way beyond the Greek issue and raising existential questions.

Chris Giles the FT’s economics editor, Tweeted this a bit earlier:

Markets are bracing for turbulence over the coming days, reports the FT’s Michael Hunter. He writes that yields on peripheral eurozone government debt were rising while the euro was showing signs of resilience after the news of Varoufakis’ resignation.

While Grimbo (Greece in limbo) is surely going to catchphrase of the day, maybe even the week, there is a new hashtag doing the rounds reports FastFT’s Katie Martin: #Varoufexit. She has done a roundup of analyst reaction to the shock resignation of the abrasive finance minister and despite the reaction of the euro this morning, the consensus is that his resignation won’t help much.

@GreekAnalyst has posted this translation of an interview given in March by Euclid Tsakalotos, the coordinator of negotiations with Greece’s lenders, who is tipped as one of the possible successors to Yanis Varoufakis as finance minster.

And this is @GreekAnalysts pithy summary of Tsakalotos, the man:

I should remind readers that we don’t as yet know who will be the new Greek finance minister, the other lead contender is George Stathakis, the economy minister

Noah Barkin, Reuters bureau chief for Germany has this Tweet on the timings of likely public utterances from various senior German politicians:

Those timings I think are Central European Summer Time, so one hour ahead of British Summer time and two hours ahead of GMT

The FT’s Peter Spiegel has flagged the blog post by Alex Stubb, the Finnish finance minister suggesting everyone is waiting for Athens to do something:

This Tweet from Anne Sylvaine-Chassany, the FT’s Paris bureau chief, is from last night but it does give you an idea of the mood in France:

Anne Sylvaine-Chassany has also flagged this gem from the interview that French finance minister Michel Sapin, gave French Europe 1 Radio earlier:

The euro is almost back at pre-referendum levels, Katie Martin from FastFT reports, and is now down just 0.3 per cent against the dollar at $1.1075. Stocks are down only mildly and German bunds, a usual safe haven, are only slightly higher.

Just to put the stock market reaction into context, the FTSE Eurofirst 300 is down just over 1 per cent, which is less than half the predicted drop pre-open.

The only really big mover in the markets is Greek debt not surprisingly although trading is pretty thin. As FastFT’s Katie Martin pointed out earlier:

It’s very unlikely that this reflects a real move out of Greek debt by your average investors. It’s much more likely to be just a shift in quoted prices.

Yields on the country’s two-year debt are up by 15.98 percentage points to 49.738 per cent. For the 10-year bonds, yields are up by 1.73 percentage points to 12.75 per cent

The FT’s Peter Spiegel has written this piece on the downfall of Yanis Varoufakis, which he tells us it began far from Athens and Brussels in the oddly-shaped postmodern national library in Riga just over two months ago.

And here’s a visual representation of the main European indices:

Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup committee, has just Tweeted to say their meeting tomorrow starts at 1pm (Central European Summer Time, I assume)

What is becoming abundantly clear is that Paris is desperately trying to stitch together a compromise behind the scenes that would keep Greece in the euro. But so much depends on the Germans and whether chancellor Angela Merkel can be convinced there is still a deal to be done given the way relations have deteriorated so badly between Athens and Berlin and the wider mood in Germany. That meeting between the Merkel and François Hollande this evening starts at 18:30 CEST in the Élysée Palace, followed by dinner.

The Eurogroup will hold a meeting on 7 July at 1pm local time in Brussels to discuss the situation following the 5 July referendum in Greece, Peter Spiegel reports.

Luis de Guindos, Spain’s economy minister, has made some interesting comments at a press conference in Madrid, Tobias Buck reports.

“The problems and solutions for Greece are exactly the same as two days ago. The rules of the euro zone are also exactly the same as two days ago,” he said.

He added that “Spain is open to negotiations (on 3rd package) as it has always been”.

But the minister also stressed that any new bail-out would require a new memorandum of understanding setting out Greek reform commitments.

The eurogroup has issued a statement confirming the meeting of eurozone finance ministers at 1pm (CEST) on Tuesday adding:

The Eurogroup will discuss the situation following the referendum in Greece . . . Ministers expect new proposals from the Greek authorities.

But the FT’s Peter Spiegel is dismissive of the latter part of the statement:

The BBC’s Robert Peston appears to have spoken to George Stathakis, the Greek economy minister:

Among those who will not be lamenting the departure of Yanis Varoufakis as Greek finance minister is Johan Van Overtveldt, the Belgian economist and writer who has served as the country’s finance minister since October, Peter Spiegel reports.

“He made things difficult for himself and his fellow ministers both by his behaviour and what he said. To say that it wasn’t nice to hear him more or less saying that his fellow ministers were terrorists is of course an understatement”, Mr Van Overtveldt told Belgian radio on Monday morning.

“He also sometimes made some very strange comments, for example he said that the European Central Bank makes up and change the rules as it goes along. This can’t be taken seriously. He sometimes put forward a very strange version of reality.”

Mr Van Overtveldt and Mr Varoufakis actually met before either of them went into politics when the Belgian economist was in Athens promoting his 2012 book “The End of the Euro”. In an interview with the FT earlier this year, Mr Van Overtveldt said Mr Varoufakis praised the book – but added the two no longer see eye-to-eye.

“He said I was right in 2012,” the Belgian minister told the FT at the time. “Now he says that I am too tough. Then I start singing, ‘The times they are a-changin’.”

Some interesting comments from Christian Noyer, governor of the Bank of France and member of the ECB governing council, courtesy of Anne-Sylvaine Chassany in Paris.

“Greek debt held by the Eurosystem cannot by its nature be restructured because that would be monetary financing of a state,” he said, declining to comment further.

This from Berlin, courtesy of Reuters:

A German government spokesman said on Monday that the door for negotiations with Greece was open, but the conditions for such talks were not yet met.
“The government takes notice of the clear ‘No’ vote and respects it,” Steffen Seibert said, adding that Germany was open for bailout talks with Greece.
“However in light of the decision by the Greek citizens, the conditions to start negotiations on a new aid programme are not met yet”, Seibert added.

Stefan Wagstyl, the FT’s Chief Germany correspondent, has sent this summary from a couple of the main German papers:

Bild, the top-selling tabloid, ran its front-page Greek story under the headline “Greeks celebrate their No. What next chancellor?”

The paper has long argued that lending money to Athens has been a waste – and giving new loans would be a scandal. It also sees the latest crisis as a setback for chancellor Angela Merkel’s efforts to keep Greece in the eurozone. Inside it runs a piece headlined “The result is a defeat for the chancellor” and a comment column under the headline “Greece chooses Grexit”.

In the conservative Frankfurter Allgemeine newspaper, columnist Peter Sturm argues that the result is a Pyrrhic victory for Mr Tsipras. “the result of the referendum is no way in Greece’s long-term interest….Alexis Tsipras and his government has promised their voters the impossible.” They must now either come of their political background and agree a reasonable programme with the creditors, or else they will become “another negative episode” in the country’s history.

For more reaction from the world’s media to the Greek No vote, please take a look at what our colleagues on Fast have put together here.

And here is a determined looking Alexis Tsipras, the Greek PM, from earlier today, heading into the meeting of party leaders that was expected to produce a successor to Yanis Varoufakis

The FT’s Stefan Wagstyl has interpreted the statements earlier out Berlin from Steffen Seibert, Angela Merkel’s spokesman. It doesn’t bode well for the Greeks or for the French.

He reports that German chancellor Angela Merkel sees no basis for negotiations over a new rescue package for Greece following the clear rejection of reform plans in the referendum. “With regard to yesterday’s decision by Greek citizens the pre-conditions for entering into negotiations over a new aid programme do not currently exist,” said Steffen Seibert, her spokesman, even though the door for talks was “always open”.

Mr Seibert also dashed lingering hopes that Ms Merkel’s visit today to French president Francois Hollande would result in new rescue proposals. He insisted that Berlin was waiting to see “what proposals the Greek government places on the table”.

Martin Jäger, the finance ministry spokesman, was just as tough. The basis for any new negotiations was the ESM treaty, he said. His words imply there will be no shortcuts to striking a new deal and that any new agreement will have to meet the ESM’s tightly-worded rules. These include two votes in the German parliament – one to authorise negotiations and the second to approve any agreed deal.

“Why the muted market reaction even though Greece is closer to an exit today than it was on Friday?” asks Marchel Alexandrovich at Jefferies.

It could be Varoufakis being out of the picture and Tsipras clearly making the initial step toward reaching a compromise (with the IMF report last week also supporting his arguments for debt relief). Or it could be the reports of Hollande ‘bending over backwards’ to get a deal done.In the coming hours we’ll know whether this initial market reaction is justified.

Jarno Hartikainen, EU Correspondent at the Finnish business media outlet Kauppalehti summarises how differently the Greek vote has been seen in different parts of the eurozone.

And here’s a reminder that it is more than just high-level politics and market turmoil at stake. Greek pensioners are seen here queueing this morning for a partial payouts of their pension:

Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, is speaking now. His tone is not exactly conciliatory.

More from Peter Spiegel on the Dombrovskis press conference.

Tom Nuttall from The Economist says the interpretation of the Greek referendum result by Dombrovskis is opposite to the one offered by Tsipras.

Tobias Buck in Madrid has a round-up of the Spanish press today.

The main editorial in El País, Spain’s biggest-selling daily, described the Greek No as a “nationalist success that requires an intelligent and firm response”. It went on to argue that “this tactical victory for Tsipras and his nationalist-populist proposals mean a sad day for Europeanism”. If European leaders don’t intervene decisively in the days ahead, the paper added, “Greek banks will today or tomorrow run out of money and there will be little that stands in the way of a state bankruptcy and a de-facto exit from the euro”.

“Greece says No to Europe” was the main headline in El Mundo. The paper argued in its editorial that European leaders now faced a “diabolical dilemma” – to succumb to the political pressure from Greece or to stand firm, and risk a Greek exit from the single currency zone. Time, it added, was running against the Greek government: “Athens needs a deal [with its creditors] in the next 48 hours”.

ABC, the conservative daily, said on its front page that Greece had tried to “take revenge for its ruin” by voting No.

The left-leaning online paper, meanwhile, said in an editorial: “The troika was hoping that the referendum would be the political death of Alexis Tsipras. Unfortunately for Angela Merkel and Christine Lagarde, it turned out differently. Syriza won the referendum by a much greater margin than expected and today enjoys all the legitimacy and stronger position than before to take a hard line against the Troika.”

We’re not suggesting that Paris is having any say in who Greece’s next finance minister might be, or indeed that Paris had any involvement in the departure of Yanis Varoufakis, but Reuters is reporting that Alexis Tsipras, the Greek prime minister, has been on the phone again to French president François Hollande in a break in talks in Athens between political leaders who are trying to decide on a new finance minister

ATHENS, July 6 (Reuters) – Greek Prime Minister Alexis Tsipras and the country’s president spoke by phone on Monday with French President Francois Hollande during a break in talks between political leaders in Athens, a Greek presidential source said.
Government and opposition party leaders were meeting at the mansion of President Prokopis Pavlopoulos, a day after Greeks voted overwhelmingly to reject the terms of an international aid deal to stave off financial collapse.

Greek Prime Minister Alexis Tsipras will speak by phone on Monday with Russian President Vladimir Putin, a Greek government official said according to Reuters. The official said Putin had initiated the call, which he said would take place during a break in talks in Athens between Tsipras and political party leaders.

As my colleague Ferdinando has just flagged, it looks like Alexis Tsipras is keeping a number of world leaders informed on progress while he huddles with other Greek political leaders in Athens, trying to decide on the next step

Reverse ferret on that Tsipras-Hollande call!


We’ll keep an eye out to see whether the Kremlin denies there are any plans for a call between Alexis Tsipras and Putin

Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, has just put out a number of Tweets in the last 20 minutes or so:

On a lighter note, some Varoufakis-themed T-shirts are now available on e-bay

We haven’t as yet got a picture of Yanis Varoufakis riding off into the sunset on his motorbike but here he is earlier dealing with a media scrum

This is the bike we’re looking, pictured late last month bringing its rider to a government meeting

Jamie Chisholm, the FT’s Global Markets Commentator, has this to say ahead of the US markets opening at 09:30 EST (14:30BST):

Heading into the US open the markets continue to display nervousness over Greece. The euro is down 0.7 per cent to $1.1035*, the FTSE Eurofirst 300 equity index is off 0.9 per cent aNd money is moving into perceived havens, with the yield on German Bunds off 6 basis points to 0.74 per cent.
However, there are signs that the anxiety seen early in the session is easing. S&P 500 futures were down 33 points at one stage but are now off just 13, while the yen has lost all its gains to trade little changed at Y122.76 per dollar.

Matteo Renzi, Italy’s PM, has just posted a FB update on the Greek crisis. The most interesting takeaway is that he is sounding somewhat more dovish than he was just a few days ago.

Last week, Renzi said the Greek referendum was a choice between the euro and the drachma.

Now that the Greeks have voted “No”, Italy’s young PM has taken a more conciliatory note. In a note he said that there are two “building sites” for Europe.

“One is Greece, a country that is in an extremely difficult economic and social condition. Tomorrow’s meeting will have to show a definitive and permanent solution to this emergency,” Mr Renzi said.

He then added that Europe must go beyond austerity and budgets and look at “infrastructure, common policies on immigration, innovation, the environment”.
“In one word: politics, not just parameters. Values, not just numbers,” Mr Renzi said.

Stephanie Flanders, chief market strategist for Europe at JP Morgan Asset Management has this to say on the impact of the Greek No vote:

We know what Greek voters have rejected. We don’t know what they have voted for, exactly—and neither does anyone else. The surprisingly emphatic victory for the “no” camp in Sunday’s special referendum in Greece has strengthened Syriza’s domestic political standing—and also made negotiations with the country’s European creditors over a new support package for Greece a lot more difficult.

There are plenty of potential scenarios from here, not all of which include a Greek exit from the euro. But the 1 in 4—or 1 in 3—chance we have ascribed to that outcome in previous notes was based on an expectation that Greeks were likely to vote “yes”. With this “no” vote we have moved firmly onto the Grexit side of the decision tree, with a messy Greek exit now more likely than not.

We can expect this to cause volatility and sell-offs in European markets and potentially very serious long-term political implications for Europe. However, assuming that policymakers respond reasonably decisively to signs of contagion, we do not currently believe the result poses a broader risk to European investors or the European recovery.

For those who can’t click on Twitter links and are having them blocked, this is what Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, posted earlier in 3 different Tweets:

Tweet 1: #EU supported #Greece to reform its economy so it could stand proud and independent from outside help in the future. #EC

Tweet 2: The stability of the #Eurozone is not in question – we are willing and able to ensure financial stability by all available means. #EC

Tweet 3: In the #Eurozone we have 19 democracies, we need a solution acceptable to all. ‘No’ makes this more difficult, need to work responsibly #EC

We assume you can live without the Twitter link to the Varoufakis T-shirts that are being sold on eBay!

Mohamed El-Erian, chief economic adviser to Allianz and chair of President Barack Obama’s Global Development Council, who wrote this for the FT earlier, has just warned those who are celebrating Varoufakis’ departure as Greek finance minister on Twitter:

and for those investment bankers who can’t access Twitter at work, this is what he Tweeted:

Naïve for creditors to celebrate #Varoufakis resig.Should #Greece compromise be poss,he would have helped to secure required domestic buy-in

Remarks by Ewald Nowotny, head of Austria’s central bank and a member of the European Central Bank’s governing council, underline the pressure facing the eurozone’s top central bankers, Claire Jones reports.

Reuters quoted Mr Nowotny saying earlier today that developments in Greece had “not made it easier for the ECB to act”. That’s putting it mildly.

The ECB has kept the terms of the €89bn lifeline it has approved to Greek banks frozen since late June. It is expected to do so again today, despite the ‘No’ vote in Sunday’s referendum raising the chances of an exit from the eurozone.

That it has done so highlights the reluctance of Mario Draghi, the ECB’s president, to take action that would in effect force one or more Greek banks into insolvency and perhaps hasten a “Grexit”.

The ECB wants politicians to take a decision on whether Greece stays or goes. But even if the eurozone’s central bankers do nothing, they could face charges of pushing Greece out of the currency union.

How so? Greek banks are close to using up all of their lifeline, known in central-bank speak as Emergency Liquidity Assistance. They may soon need more cash to cover withdrawals from ATMs, even though these have been limited to just €60 a day for the past week.

The ECB would, however, struggle to justify a rise in ELA — the only option available to Greek banks to restore their euro cash reserves — without damaging its credibility.

Ever since the relationship between Greece and its creditors began to deteriorate, Mr Draghi has claimed the central bank is a “rules-based institution” that is above the political fray. With the probability of a Grexit soaring increasing ELA now would jar with those rules, which are designed to ensure the ECB is repaid — in euros — on any loan it makes to the region’s lenders.

Signs of a new deal between Greece and its creditors, or steps such as eurozone leaders’ assurances they would cover any losses on the Greek government debt and government-guaranteed debt Greek lenders are swapping in exchange for their emergency loans could give the central bank the cover to act.

Reuters is now citing a Kremlin statement that says Russian president Vladimir Putin and Greek prime minister Alexis Tsipras discussed by phone on Monday the results of a referendum in which Greeks overwhelmingly rejected the bailout terms proposed by international creditors. The agency adds the statement did not mention any potential Russian financial support for cash-strapped Greece.

So unlike supposed phone call between Tsipras and French president François Hollande this morning, which was swiftly denied by Paris, this call did take place (just to round off post from 11:43am)

And now to Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup of eurozone finance ministers, who has been speaking in The Hague ahead of a Dutch cabinet meeting:

He has said the No vote makes talks with Greece’s creditors more difficult but the aim is to keep the country in the eurozone, Reuters reports. Dijsselbloem told reporters:

It doesn’t bring us closer to a solution right away. In fact, when proposals are rejected that only makes things more difficult

But he said said keeping Greece in the eur zone “is still their objective and mine.”

Dijsselbloem said the Dutch government would discuss a Greek request for additional emergency funding under the European Stability Mechanism (ESM).

“We are going to look, step by step, if we can save the process,” Dijsselbloem said as he headed into a Dutch government meeting. “At the same time, there is a request for an ESM program.”

Hollande and Merkel are meeting tonight in Paris at 6pm local time. There will be a joint statement at 7.15, Anne-Sylvaine Chassany reports. stay tuned!

Scanning a breakdown by region of the Greek referendum results, a rare NAI (Yes) vote sticks out from the OXI (No) pile, Kerin Hope reports.

On the Cycladic island of Andros, home in summer to scores of shipowners normally based in Athens, the NAI vote reached 59.7 per cent.

But it wasn’t enough to swing the rest of the archipelago – which also includes the tourist islands of Mykonos and Santorini – behind a deal that would guarantee Greece can stay in the euro.

The OXI vote for the Cyclades came in at 62.1 per cent. That was still well short of the highest No percentage – 73.7 per cent in western Crete where former finance minister Yanis Varoufakis is seen as a native son.

Looks like Tsipras and Merkel may have agreed on something – courtesy of Manos Giakoumis, head analyst at MacroPolis, a consultancy.

It seems that the five hour plus meeting of Greek political leaders is starting to bear fruit, according to Reuters.

The agency says Alexis Tsipras, the Greek prime minister, has spoken to Germany’s Angela Merkel by phone and agreed he will present proposals to the summit of eurozone leaders on Tuesday. We await further infomation and indeed confirmation.

The head of the well-respected Ifo Insitute in Germany, Hans-Werner Sinn, who has taken a hardline on Greece in the past, says it is time for the country to re-adopt the drachma.

The drachma should be introduced immediately as a virtual currency. All of the country’s contracts, including its debt contracts with foreigners, should be converted into drachma. This would make the Greek government and the Greek banks solvent once again. At the same time, the Community of States should also refrain from trying to collect up all of those euro banknotes currently in the hands of Greek citizens, but should allow them to be used for cash transactions instead, although prices would be stated in drachma

Here’s a bit more on that meeting of Greek political leaders, which started at 10am local time (8am BST) from the FT’s Kerin Hope in Athens.

Five of the six Greek party leaders present are now trying to wrap up a joint statement declaring that Greece really does want to stay in the eurozone (the exception is the staunchly Stalinist Greek communist party leader, Dimitris Koutsoumbas).

She says it was interrupted several times for phone calls to other leaders. Greek president Prokopis Pavlopoulos spoke to French president François Hollande; prime minister Alexis Tsipras spoke to Russia’s Vladimir Putin, and also to Germany’s Angela Merkel as reported earlier. Local media is reporting that Tsipras promised Merkel he’d bring new bailout proposals to tomorrow’s eurozone summit.

Kerin Hope confirms from Athens that Greek prime minister Alexis Tsipras will present fresh Greek bailout proposals at the EU summit tomorrow, as agreed with Germany’s Angela Merkel, earlier in a phone call.

Gideon Rachman, the FT’s chief international affairs commentator, says Europe should welcome the outcome of the Greek referendum. He also outlines a deal which the eurozone and Greece should strike.

If European leaders were thinking clearly, they should see that rather than punishing Greece, it is now in the EU’s interests to do its level best to make sure that Greece can leave the euro, but stay inside the EU with a minimum of pain. If that means giving Greece debt relief as part of the exit package, so be it. Debt relief, in return for Grexit, could make political as well as economic sense.

Any Greeks hoping for a more conciliatory line from Sigmar Gabriel, the German social democrat leader, and Angela Merkel’s deputy, than from his boss will be disappointed, Stefan Wagstyl in Berlin reports.

In a press conference, Mr Gabriel echoed the chancellor’s tough line saying that the referendum result was a rejection of the eurozone’s rules. He warned that Greece stood on the verge of bankruptcy and urged the 28 EU member states to stand ready to provide emergency assistance, with medical supplies, for example. “All 27 other states must together be ready to help.”

Mr Gabriel signaled that there could be no short cuts to a new eurozone deal, saying that if Greece wanted a new financing agreement, it would have to reach a deal with all 18 eurozone partners.

Reuters is reporting that the Greek government will extend the bank holiday.

It’s worth remembering that if the Greek government does extend the bank holiday as reported by Reuters that some Syriza politicians had promised voters ahead of Sunday’s referendum that banks would re-open again on Tuesday regardless of the outcome as we wrote some way down in this story yesterday:

Members of the leftwing Syriza-led government tried to reassure voters on Friday, claiming that banks would reopen by Tuesday regardless of the outcome of the referendum.

The FT’s Kerin Hope in Athens is being told the bank holiday could last all week

The meeting of Greek party leaders is over after almost seven hours and Kerin Hope reports the morning’s sober mood seems to have lifted somewhat.

“It’s a one-way street now to a (bailout) agreement,” said Panos Kammenos, defence minister and leader of the small rightwing Independent Greeks party, the junior coalition partner in the leftwing Syriza-led government

We (well technically the Athens press pack) have tracked down Yaris Varoufakis, the now ex-Greek finance minister, and his bike. The lady on the back is his wife Danai and we think the guy in the red shirt is a photographer who kindly ducked out of the way of other snappers as they tried to get the picture. We hope that whoever was driving the bus had seen the bike coming

Christine Lagarde, the head of the International Monetary Fund, has broken her silence in the wake of the Greek No vote but she doesn’t add anything. Here goes anyway:

The IMF has taken note of yesterday’s referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so.

Emoticon Kerin Hope in Athens tells us that Euclid Tsakalotos, who had previously been the coordinator of negotiations with Greece’s lenders, is confirmed as the new Greek finance minister

The US markets have been open for a while now and much like their European counterparts remained relatively unmoved by the Greek No vote.
Bloomberg reports that the Standard & Poor’s 500 Index was little changed at 10:45 a.m. in New York, while the Stoxx Europe 600 Index lost 0.8 per cent, paring a decline of 1.6 per cent. The euro trimmed a slide of more than 1 per cent to trade at $1.1065. Treasury 10- year yields fell five basis points to 2.36 per cent.

Ulrich Kater, chief economist of Deka Bank, which manages the assets of the German savings banks, said that the pressure on the Greek banking system – which is fast running out of cash – might make the Greek government more open to compromise, writes the FT’s James Shotter in Frankfurt. However, Mr Kater conceded that the risks of Grexit had increased materially. “For the first time, we see the probability of Grexit as higher than the chance of it remaining permanently in the euro,” he said.

The FT’s Brussels bureau chief, Peter Spiegel, has been looking at how a Grexit might work legally, given that the Greeks, or at least Yanis Varoufakis, the now ex-finance minister, had argued the country could never leave the eurozone because there is nothing in the treaties that permit an exit. He thinks the lawyers might have found a few possible routes but none are exactly clear cut. Read his blog here.

Here is the slightly understated invitation to the Eurozone leaders summit on Tuesday evening:

Here are some reactions in the Italian press, courtesy of Giulia Segreti in Rome.

The main editorial – “The Hellenic Labyrith” – in Corriere della Sera, Italy’s biggest-selling daily writes that “After five years of agony, Tsipras’s Greece consumed the biggest break in the history of European integration.”

“From this morning the Greek PM will have to come to terms with his promises, which, risk turning into lies,” it adds, explaining that the country now enters a new and unpredictable chapter of its history, and the consequences of the vote will be particularly felt in Spain and Italy where populist movements strongly supported the “No” vote.

“Greece, a slap for Brussels” is the main headline on la Repubblica, the country’s most read newspaper. In an analysis by its Brussels correspondent, the paper says that the most serious mistake would be to leave it to the ECB and the IMF to decide the future of Greece. In the same paper, Marc Lazar, a French academic, points out that the consequences do not only involve the Euro and Europe “but the impact is devastating for the European left overall, which has not found a shared position.”

Lorenzo Bini Smagni, a former ECB executive board member, writes on la Repubblica that “it’s a difficult situation as the Greeks will now refuse to make any further sacrifice”.

Il Manifesto, a left-leaning paper, writes “Eureka” on its first page, also mentioning “the slap of Athens” in its front page comment.

“Greece says no, Europe holds its breath,” says La Stampa’s front page. In its main editorial it writes that “Albeit the electoral promises, the ‘no’ vote make the euro exit closer….Tsipras and Varoufakis deceive themselves by hoping to return to Brussels with a stronger negotiating power.. too deep is the crack with the counterpart”

The main headline on Il Giornale, a centre-right daily, close to former prime minister Silvio Berlusconi, reads: “Greece wins, Merkel loses – Europe on the brink while Renzi is humiliated”.

Five of Greece’s six political party leaders have signed a joint statement declaring they are committed to keeping Greece in the eurozone (the sixth, Dimitris Koutsoumbas, secretary general of the Greek community party opted out) – Kerin Hope reports.

According to one source, the statement was requested by French president Francois Hollande as part of his initiative to avert a Grexit.

The top priority, the statement says, is to get liquidity flowing back into Greek banks in cooperation with the European Central Bank.

In an ununusally co-operative move for a Greek politician, prime minister Alexis Tsipras has undertaken to brief the political leaders himself not only after Tuesday’s EU summit but during the course of the bailout negotiations.

There are four lines of agreement:

- The aim is to secure a “socially just” bailout agreement

- The deal must include fiscal and structural reforms needed to get Greece’s economy back in shape, with “the least possible recessionary impact”

- It must include a sizeable chunk of financing to boost economic growth

- It should include a commitment by the creditors to begin a “substantive discussion” on making Greece’s mountainous debt viable.

Some somber words from George Osborne, UK chancellor of the exchequer, as he speaks to Parliament about the Greek crisis.

Greece is a proud nation and a very long standing ally of the UK and we respect the decision of its people. But there is considerable uncertainty about what happens next. We need to be realistic – the prospects of a happy resolution of this crisis are rapidly diminishing.

Osborne adds he had a meeting this morning with Prime Minister David Cameron and the Governor of the Bank of England, Mark Carney, to review Britain’s response to the crisis.

Osborne also had some words of caution for holidaymakers.

It is unrealistic to think that we can provide a consular presence on all the Greek islands and that’s why we urge everyone travelling to Greece to look at the travel advice before they go. It is clear British holidaymakers should take sufficient euros in cash to cover the duration of their stay, emergencies, unforeseen circumstances and any unexpected delays. Travellers should be careful and take sensible precautions against theft.

The British government also stands ready to help British business, Osborne said, before concluding by urging Greece and eurozone parners to strike a last-minute compromise.

The situation risks going from bad to worse. Britain will be affected the longer the Greek crisis lasts, and the worse it gets. There is no easy way out. But even at the eleventh hour we urge the Eurozone leaders and Greece to find a sustainable solution.

Jim Waterson at BuzFeed has dug out the PhD thesis of the new Greek finance minister Euclid Tsakalotos. It has a most telling name.

Dimitris Mardas, deputy finance minister, said Greece’s bank holiday was being extended through Tuesday and Wednesday under a special ministerial decree, Kerin Hope reports.

He signalled that capital controls imposed a week ago may be tweaked to allow banks to offer customers a limited variety of transactions under another decree now being prepared.

Public Issue, a Greek polling company, has just published a breakdown of how the Greeks voted in #Greferendum. It is well worth a look.

A round-up of what happened on European markets today, thanks to Thomas Hale.

European markets were eerily calm on Monday. Yields on the 10-year German Bund edged down just 3 basis points to 0.764 per cent, while peripheral yields rose, but only moderately. Italian 10-year yields were up 14 basis points at 2.39 per cent, and Spanish 10-year yields edged up by 16 basis points to hit 2.37 per cent.

European equities moved more sharply. The FTSE Eurofirst 300 ended the day down 1.2 per cent, having earlier hit its lowest level since February.

The euro was up 0.05 per cent at $1.1077.

Hollande and Tsipras giving a joint press conference now.

In a short joint press conference with Francois Hollande in Paris, Angela Merkel left the door open to more negotiations but said it was up to Tsipras to present new proposals tomorrow. The German chancellor said the two leaders respected the vote of the Greek people, but added that democracy also meant they had to respect the will of the people in the other 18 eurozone member states.

The ECB has kept the amount of emergency liquidity provided to the Greek banks frozen, but has “adjusted” the haircut on collateral lenders post to the central bank in exchange for these loans.

There is little detail in the central bank’s statement, but analysts believe the haircuts have been raised, which is bound to increase the pressure on Greece’s already troubled lenders.

More on that press conference in Paris from Anne-Sylvaine Chassany

Francois Hollande said the door was open to negotiations, but urged the Greek government to send “serious and robust” proposals first.
“There’s not much time left and it’s urgent,” he said.

“We are saying that the door is open to negotiations and that’s the reason why heads of eurozone states and governments are meeting tomorrow,” Angela Merkel said in Paris, echoing comments made by French president Francois Hollande a few minutes earlier.

“But at the same time, the conditions for new negotiations on a concrete European plan are not yet met, and that;s the reason why we are waiting for precise proposals from the Greek government. Of course. it’s urgent to have those proposals to get out of this situation. What really drives us, is solidarity. And we already proved our solidarity towards Greece, and the last proposal was very generous.”

“We are also going to see what will be the reaction of the 18 other eurozone countries. That too is democracy. We have a shared sovereignty.”

Chris Giles, FT’s economics editor, on the decision by the ECB to keep ELA unchanged while “adjusting” the haircut.

More on that important ECB decision from Claire Jones

The eurozone’s central bankers have toughened the terms of their lifeline to the Greek banking system, raising the discounts — or haircuts — on the collateral Greek banks are swapping for their emergency funding.

The move, made by the European Central Bank’s governing council on Monday, means Greek lenders will have to stump up more assets in exchange for the Bank of Greece’s Emergency Liquidity Assistance.

The ECB refused to disclose the size of the new haircuts, but all four of Greece’s main banks are thought still to have enough collateral available to roll over their emergency loans. Two people on the governing council objected to the decision, according to Eurosystem sources. Both of the objectors wanted the ECB to take stronger measures.

The governing council left the ceiling on Emergency Liquidity Assistance from the Bank of Greece frozen at €89bn, but said in a statement that the financial situation of Greece “has an impact on Greek banks since the collateral they use in ELA relies to a significant extent on government-linked assets.”

Greek banks were thought to be using government bonds and government-backed bank debt to access loans worth just below €50bn.

“In this context, the governing council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA,” the ECB said in a statement.

Meanwhile, a Twitter exchange between Chris Giles, FT economics editor, and Michael Steen, head of media relations at the ECB, offers some further guidance on tonight’s ECB decision.

Some more on the ECB’s decision to increase the haircut on collateral posted by the Greek banks from James Mackintosh, investment editor at the FT.

Time to draw this liveblog to a close. From all of us goodnight and hopefully see you tomorrow.