Greece moves to tap local governments´ cash

In a race to buy time and raise liquidity to meet upcoming international debt payment obligations, Athens issued a decree in effect confiscating local governments´ cash balances and short-term liquid assets.

On Monday afternoon the Greek government asked its local governments to transfer their cash reserves and term deposit funds to their respective accounts at the central bank.

“The regulation is submitted due to extremely urgent and unforeseen needs,” a statement on a government website said.

Commenting on the current dire straits in which the Mediterranean country finds itself, in a research note sent to clients on Monday morning analysts at RBS wrote: “Ultimately we expect Greece will be driven to a new election by June as either [Prime Minister] Tsipras will not be able to pass the requisite measures [to tap bailout funds] through his current coalition or a major missed payment of either wages or pensions undermines popular support for the government.”

A third, and more constructive, possibility is that Athens will seek a fresh mandate to complete the current bailout, RBS added.

In any case, the analysts concluded by saying a Greek exit from the Eurozone was unlikely as neither the country´s populace nor its creditors desired such an outcome.

As of 16:58 the yield on 10-year Greek sovereign bonds was higher by 40 basis points to 13.33%.