In brief
After months of political stalemate in negotiations with its creditors to unlock access to bailout funds, the Greek government has announced a referendum on proposed bailout conditions, an extended bank holiday and the imposition of capital controls. Greece now appears unable to meet scheduled payments to the IMF and other international creditors following termination of its bailout programme on 30 June 2015. These developments were triggered by substantial depositor withdrawals from Greek banks over recent weeks and have led to the ECB's Governing Council restricting Greek banks' access to further central bank funding through Emergency Liquidity Assistance and to speculation about what all this means for these banks and Greece's continued participation in the eurozone.
While these events are occurring on the other side of the globe, the outcome of the Greek referendum and access to any bailout funds remains of keen interest to investors in the Australian market, in particular given the potential impact on future capital flows into and out of Europe. The relevance of Greece's instability to the Australian market was clearly demonstrated yesterday when $38 billion was wiped off the ASX 200 in reaction to the news that talks had broken down between the Greek government and its key EU and IMF creditors.