Thursday, June 18, 2015

To Russia With Account Opening Forms?

If the Greek government is intent to default unless it gets its way, which is the way things seem to me, then I hope that they have prepared for the time after default.

One of the most critical aspects of default within the Eurozone will be to maintain the ability to make international Euro transfers and to collect incoming transfers. It could well be that the ECB will be 'nice' and continue to process Greek transfers but it could also be that some vulture funds jump the gone and start legal action à la Argentina.

The safest way would be to re-route international transfers through the banking system of a country which is sympathetic to Greece. Russia comes to the top of my mind. So if this has not been set up yet, then I hope that Alexis Tsipras is taking account opening forms with him on his trip to Moscow tomorrow so that the Bank of Greece can run its international payments safely through he Central Bank of Russia.


  1. The best way to really alienate eastern european countries (and the Baltic states are part of Euro group, so Greece needs them) is to buddy with Russia.
    The "accounts in russia" idea sounds extremely stupid to me.
    Tsipras should better go to America with that idea, they like Varoufakis and Tipras as well and they are no direct threat for any other Euro-country.

    1. I apologize for having proposed an extremely stupid idea.

    2. To Roger,

      First, let me say, that i believe that in SYRIZA they have no real plan for anything, they have always been a party of scattered ideas and i would be shocked if they have arrived to the point of thinking such "details". Minister Voutsis mentioned that they have been preparing themselves psychologically for rupture for several months. Other than this psychological preparation, he mentioned nothing.

      I am not aware of any particular reason of why Syriza would worry about relations with the Baltic states...If things would arrive to the point of rupture with the western europe, i think the last thing that Tsipras would worry about is the Baltic states. If finding a foreign central bank in the issue, even if Russia denies, i am sure they will find somenone either in latin america or in Asia... Prof. Costas Lapavitsas, arguably Syriza's primary expert in matters of defaulting and returning to dracma, arrived to the point to write that Greece should turn to alliances with Russia, China and... Iran. So if even Iran is an option at this point, i am sure they will find someone in a spot of the world.

    3. I must humbly apologize to SYRIZA. It seems that in the 11th hour, at least one of them, is preparing something. According to newspaper article, minister Lafazanis has prepared plan for 6 months of fuel self-sufficiency, expandable to 9 months.

      It must be because he belongs to the SYRIZA faction that would really like to return to the drachma, so he is serious about his ideas.

      At the same moment SYRIZA MP Mitropoulos, declared, that after what happened yesterday, the EU is trying to force SYRIZA to default within the euro, as "for the first time yesterday the EU used mechanisms of legal blackmail and i don't think can expect much more from political negotiation". Being former PASOK, he is one of the most moderate in Syriza.

    4. Roger, thank you for your fair strong comment. I fully agree with it.
      Anonymous: thanks, I like your comment also very much.

      I have one question

      Who in the entire world has NOT followed all about this Greek crisis and this insane Greek government?
      All know that it is a kind of a financial suicide to (try to) cooperate with them, and I am sure not any bank will even think about it to start negotiating.

      Nobody wants to face what the EU faces, the ECB and IMF.
      All know that they will be treated in the same way. A snake will not change into a lovely lamb.

  2. I apologize my choice of word, it was inappropriate.
    Nevertheless I suppose any that close deal with Russia would mean a huge resistance and certain veto by Baltic states for any further Greek proposal or request in the Euro-group.
    Baltic states are quite worried to get the next victim of agression from Russia, just like Ukraine.

  3. Now minister Lafazanis denies he gave order to Greek oil refineries to increase their fuel reserves as part of his self-sufficiency plans. He added that the Oil refineries have always a standard procedure on reserves and new orders. The news that he gave now an order is part of scare tactics to terrorize the greek population.

  4. Mr. Kastner,

    What is your opinion on Mish Shedlock....

    I think his analysis is correct that whether Greece Bankrupts or is given a new loan the eu citizens will evntually foot the bill.

    If you ar interested also se the video of his discussions of bankrupt municipalities of Illinios. I guess the "greek" type of problem is just not in Greece.



    1. Varoufakis formulated his strategy back in 2012 ("Default DOES NOT equal Grexit!"). One key bargaining chip which he mentioned at the time has not yet been put on the table and that is Greece's veto power in the European Council. Yes, Greece could bring down - much to the enjoyment of the US... - all EU sanctions against Russia, and a lot of other things which are utterly important for the EU. I yesterday asked on twitter when Greece is likely to put this bargaining chip on the table and it received a lot of attention for it.

  5. ultimately, every EUR payment, even initiated through a correspondent bank in Russia, is settled in Euro systems. so would that really preserve their ability to send and receive Euro payments?

    Jerome Druesne

    1. You are right that Euros can only be settled within the Eurosystem but it depends who the counterparty is. If a Greek bank holds its Euros in an account with the Central Bank of Russia, the ECB's counterparty is the CB of Russia and not the Greek bank. If someone (like a vulture fund) wanted to get his hands on the Euros of the Greek bank, he would have to deal with the CB of Russia and not with the ECB. If all Greek banks routed their international transfers through Russian banks, only Russia could intervene with those monies even though the Euros themselves would be within the Eurosystem (in the name of Russian banks).