Greece is on the brink. Prime Minister Alexis Tsipras has until Thursday to come up with a new deal to save his country: On Sunday, European leaders will decide whether to give Greece a new bailout or abandon the country to financial chaos and Grexit.
But in many ways, it is too late already. Greece effectively introduced a parallel currency when it closed the banks and imposed capital controls on June 29. Euros held in Greek accounts are worth less than euros held at non-Greek banks simply because they’re not as accessible.
Daily cash withdrawals have been limited to €60 per person and money transfers abroad now require special permission. These curbs are necessary to prevent Greek deposit holders from clearing out their accounts for fear of an exit from the euro zone and a move to a new, weaker currency.
Even if Greece reaches a bailout deal, the question remains: how much longer will the banks have sufficient capital to keep functioning? After all, more than a third of the lending on their books has gone bad, and that proportion is increasing.