Greece’s move to avert the threat of a bank run comes amid a dramatic escalation of the country’s debt crisis after Greek Prime Minister Alexis Tsipras surprised European policy makers Friday by calling a Greek referendum on whether to accept the terms of the country’s creditors to unlock badly needed financial aid.
Tsipras’s gambit means Athens will almost certainly default on a $1.72 billion payment it owes the International Monetary Fund on Tuesday. Greece’s international bailout expires the same day, meaning the country would no longer be under the umbrella of an international rescue package. Finance ministers of other eurozone countries rejected Greece’s request for a one-month bailout extension to give it time to hold the referendum.
“The coming days will clearly be important,” said IMF Managing Director Christine Lagarde. “The IMF also will continue to carefully monitor developments in Greece and other countries in the vicinity and stands ready to provide assistance as needed.”