Greek banks and the stock exchange will be shut for at least a week after creditors refused to extend the country's bailout and savers queued to withdraw cash, taking Athens' stand-off with the European Union and the International Monetary Fund to a dangerous new level. Greece's banks have been kept afloat by emergency funding from the European Central Bank and are on the front line as Athens moves towards defaulting on a 1.6 billion euros payment due to the International Monetary Fund on Tuesday.
The ECB had made it difficult for the banks to open on Monday because it decided to freeze the level of funding support it gives the banking system, rather than increasing it to cover a rise in withdrawals from worried depositors.
Amid the drama in Greece where a clear majority of people want to remain inside the euro.The next few days present a major challenge to the integrity of the euro zone currency bloc. The consequences for markets and the wider financial system are unclear.
Greece's left-wing Syriza government had for months been negotiating a deal to release funding in time for its IMF payment. Then suddenly, in the early hours of Saturday, Tspiras asked for extra time to enable Greeks to vote in a referendum on the terms of the deal. Creditors turned down this request, leaving little option for Greece but to default, piling further pressure on the country's banking system.
The creditors want Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed. Many leading economists have voiced sympathy with the Greek government's argument that further cuts in spending risk choking off the growth which would give Greece some prospect of servicing debts worth nearly twice its annual national income.
On Sunday the ECB stated it would hold the funding line at the same level as Friday, despite the deposit outflows estimated to be €500mio. The central bank said it was monitoring the situation and stood ready "to reconsider its decision." The 18 other countries sharing the euro countries have blamed Greece for breaking off negotiations and pledged to do whatever it takes to stabilize the common currency area.
International Monetary Fund boss Christine Lagarde said that if the July 5 vote produced "a resounding yes" to remain in the euro and fix the Greek economy then the creditors would be willing to make an effort.
We expect there to be a massive amount of volatility in the Euro this week due to the uncertainty surrounding the predicament in Greece.
13:00 - EUR - German inflation (CPI) June expected to be lower form 0.5% from 0.7%