Greece said it may impose capital controls and keep its banks shut on Monday after creditors refused to extend the country's bailout and savers queued to withdraw cash, taking Athens' standoff with the European Union and the International Monetary Fund to a dangerous new level.
Euro zone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated and government revenue slumped as Athens and its international creditors remain deadlocked over a debt deal.
Most top credit rating agencies say they would not cut Greece's rating to default if it misses a payment to the International Monetary Fund or European Central Bank, a stance that could keep vital ECB funding flowing into the financial system.
Greece is in talks with its international creditors -- euro zone governments and the International Monetary Fund -- on a package of reforms that would help unlock more funding to prevent the cash-strapped country defaulting.
Greece can scrape together enough cash to meet its payment obligations until June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default as hopes receded of a deal with its creditors to release fresh aid.
Greece is unlikely to exit the euro, either intentionally or accidentally. But it might be forced to introduce an alternative means of payment, in parallel to the euro, to pay some domestic bills if a reform-for-cash deal with its creditors is not secured soon, several euro zone officials said.
Warning Greece it had "no time to lose", euro zone ministers agreed technical talks between finance experts from Athens and its international creditors would start on Wednesday with the aim of unlocking further funding.
Greek funding and quantitative easing in Europe, an expected rate cut in Australia and the buoyant U.S. labor market are set to be the focus of an economic week dominated by a host of central bank meetings.
The European Central Bank faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said, increasing pressure on Athens to sign up to an extended aid-for-reform program.
The coming week will go a long way to dictating whether Greece remains in the euro zone. A meeting of euro zone finance ministers on Monday is tasked with producing a deal that will keep Greece solvent and which is acceptable to both sides.
Greece's central bank has moved to protect its banks from any fallout from the coming general election, asking the European Central Bank to approve a stand-by domestic emergency funding line, a Bank of Greece official said on Saturday.
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