No vote adds uncertainty on Greece’s future

The referendum’s result adds another layer of uncertainty to a very uncertain situation. All eyes will now be on the ECB on Monday, according Diego Iscaro, Senior Economist, IHS Global Insight.
“We expect the central bank to continue providing liquidity to Greece’s financial sector, although the small chance of the ECB increasing the cap on the emergency liquidity assistance this week has disappeared with the referendum result.”
“This significantly raises the probability of banks running out of cash over the coming days. We estimate it is very likely banks will not reopen on 7 July as currently expected. Moreover, the limit on bank withdrawals, currently at EUR60, may also need to be reduced,” added Iscaro.
“Negotiations will resume over the coming days but the probability of a deal is distant. Tsipras’ argument is that he can now go back to the lenders in a stronger position. However, we believe it is unlikely the creditors’ proposals will be significantly relaxed as a result of the “no” vote. It will now be impossible for the SYRIZA-led government to accept the deal currently on the table, which means that the risk of a total collapse in the negotiations has increased significantly.”
“The only hope of a deal may rest on the IMF convincing Eurozone governments to include a clause promising debt relief in the future, conditional to Greece meeting certain targets. This will be extremely difficult but lenders may come to the conclusion that it is the only way to avoid Greece leaving the Eurozone.”