Greece’s central bank has issued the clearest warning yet that the country is on course to default on its sovereign debt at the end of the month and crash out of the single currency, while finance ministers across Europe also confirmed they are making contingency plans for a messy ending to the crisis.
Athens is due to repay €1.6bn to the International Monetary Fund on 30 June but will be unable to do so unless its creditors release a €7.2bn bailout payment before then. Continue reading
Tag Archives: economic fallout
U.S. Treasury, Fed planning for possible default – source
U.S. Treasury and Federal Reserve officials worried about the growing possibility of a catastrophic default are crafting contingency plans to mitigate the economic fallout if Congress fails to extend America’s borrowing authority, a source familiar with the plans said.
With just eight days before the Treasury Department says the U.S. will hit its $16.7 trillion (10.46 trillion pounds) borrowing limit, lawmakers and the White House remain far from a deal to extend it. Officials are examining what options might be available to calm financial markets if a U.S. debt payment is missed.
The specifics of their planning remain unclear, but the source said an area of special focus is a key bank funding market known as the tri-party repurchase agreement, or repo, market, where banks often use Treasury bills, notes and bonds as collateral for short-term loans from other banks and big money market funds. Continue reading