Greece extends bank holiday

Greek banks will remain shut for the remainder of the week and limits on cash withdrawals from ATM’s maintained.

According to various media reports the country’s finance ministry may issue an official decree formalising the above decision on Wednesday evening.

New reform proposals from Athens are expected to be delivered to international creditors on Thursday.

Eurozone leaders have set a Sunday deadline for an agreement to be reached.

At present, ordinary Greeks can only withdraw €60 a day through banks’ ATM’s.

Earlier on Wednesday the European Central Bank had reportedly decided to maintain its cap on further funding for Greek banks via its Emergency Liquidity Assistance facility, with a review scheduled to be carried out on Monday.

"Without a deal by Sunday, the situation in Greece could precipitate. First, the treasury may face cash shortages for payment of pensions and salaries, and may be forced to issue IOUs/scrip currency. Second, the ECB may have to further tighten ELA to Greek banks, following an increase in haircuts to government-linked collateral on Monday.

"The ECB also published new guidelines and objectives for ELA yesterday, which include moral hazard as a risk to consider when extending liquidity (more on this in the box below). Without an agreement on Sunday, the ECB will likely be forced to tighten liquidity and may even withdraw it, should Greece miss a payment to the ECB itself on July 20," RBS said in a research note e-mailed to clients.