 "Greece seeks two-year bailout programme")
Greece's government on Tuesday sought a two-year bailout programme from the European Stability Mechanism, according to a statement from the office of Prime Minister Alexis Tsipras. The request is to cover the country's entire financial needs for the next two years, along with a debt restructuring plan, the Greek government said in a statement.
The government would continue negotiations to seek a "viable agreement" within the euro zone, it added.
Earlier, the country said it would miss a payment to the International Monetary Fund (IMF).
Meanwhile, German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece would stay in the euro zone for the time being if Greek voters reject austerity in a referendum scheduled this week, according to three people present.
He added the European Central Bank (ECB) would do what was needed to protect the euro if Greeks voted against the bailout terms in the July 5 referendum, according to the people, all of whom participated in the closed-door meeting on Tuesday.
The German finance ministry declined to comment.
European leaders offered the same deal Tsipras had rejected on Saturday. The Greece government set new limits on pension payments, as cash began running out. There were isolated reports of shoppers stocking up on medicine and baby formula.
Tsipras and his creditors are brawling amid a landscape transformed by his shock call for a July 5 referendum. While he labels it a vote on austerity, his counterparts in Berlin and Paris say it's nothing less than a decision on whether to remain in the euro zone. The ballot might be rendered moot by an unpaid bill to the IMF; that could prompt the ECB to withdraw its lifeline, now frozen, to the country.
"A 'no' in the referendum would make it almost impossible for the IMF and for Europe to provide support for Greece beyond what would de facto be humanitarian relief," said Holger Schmieding, chief economist at Berenberg Bank in London. "The, Greece would have to issue IOUs as a first step to a Grexit." Beyond the nation's fate, at stake is the credibility of the currency union conceived as the irreversible and crowning achievement of post-World War II integration. "If the euro fails, Europe fails," German Chancellor Angela Merkel often says.
For now, at least, markets suggest investors are confident in policymakers' efforts to quarantine Athens during more than five years of crisis fighting. The euro is trading at about $1.11, the same as before Tsipras's referendum announcement and the breakdown of negotiations on June 26. Bond yields were little changed in Spain, Portugal and Italy, which sold euro 6.8 billion ($7.6 billion) of debt on Tuesday.
The most pressing question on Day Two of Greek capital controls was: how would the ECB respond to Greece becoming the first advanced economy to miss a payment to the IMF? The central bank, which has pumped euro 89 billion of emergency liquidity assistance into the country, hasn't said how it would classify it or react. Policymakers would have to consider the effect of any missed payment on the solvency of Greek banks against the political consideration when they discuss the level of assistance on Wednesday.
The ECB's decision on whether to provide emergency liquidity assistance "will not be taken without political cover at the highest level", Erik Nielsen, global chief economist at UniCredit SpA in London, said in a note. Limited to euro 60 a day of withdrawals, Greeks will find it impossible to resume life as before. For the poorest, it will be a struggle to survive. A mere 12 hours after issuing the capital-controls decree, the government revoked a provision that exempted pension payments from the caps.
The stress is beginning to show. On Tuesday morning, two pensioners came to blows on a bus returning from the beach to Athens over who was to blame for the crisis. In the capital's Pangrati Square area, pharmacist Xenia Babou reported a "significant increase" in sales of medicines and milk powder. Outside his shop, Communist Party members handed out leaflets urging a 'no' vote in the referendum. Tsipras is counting on voters' anger after five years of austerity imposed in exchange for aid. "The referendum will give us a stronger negotiating position when the talks resume," he said in an ERT TV interview. "The higher the participation and numbers of people voting 'no', the stronger our position will be." A vote in favour would make the government's position untenable and probably lead to early elections. That could produce a new leadership, more amenable to the demands of creditors.
The government would continue negotiations to seek a "viable agreement" within the euro zone, it added.
Read more from our special coverage on "GREECE CRISIS"
Earlier, the country said it would miss a payment to the International Monetary Fund (IMF).
Meanwhile, German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece would stay in the euro zone for the time being if Greek voters reject austerity in a referendum scheduled this week, according to three people present.
He added the European Central Bank (ECB) would do what was needed to protect the euro if Greeks voted against the bailout terms in the July 5 referendum, according to the people, all of whom participated in the closed-door meeting on Tuesday.
The German finance ministry declined to comment.
European leaders offered the same deal Tsipras had rejected on Saturday. The Greece government set new limits on pension payments, as cash began running out. There were isolated reports of shoppers stocking up on medicine and baby formula.
Tsipras and his creditors are brawling amid a landscape transformed by his shock call for a July 5 referendum. While he labels it a vote on austerity, his counterparts in Berlin and Paris say it's nothing less than a decision on whether to remain in the euro zone. The ballot might be rendered moot by an unpaid bill to the IMF; that could prompt the ECB to withdraw its lifeline, now frozen, to the country.
"A 'no' in the referendum would make it almost impossible for the IMF and for Europe to provide support for Greece beyond what would de facto be humanitarian relief," said Holger Schmieding, chief economist at Berenberg Bank in London. "The, Greece would have to issue IOUs as a first step to a Grexit." Beyond the nation's fate, at stake is the credibility of the currency union conceived as the irreversible and crowning achievement of post-World War II integration. "If the euro fails, Europe fails," German Chancellor Angela Merkel often says.
For now, at least, markets suggest investors are confident in policymakers' efforts to quarantine Athens during more than five years of crisis fighting. The euro is trading at about $1.11, the same as before Tsipras's referendum announcement and the breakdown of negotiations on June 26. Bond yields were little changed in Spain, Portugal and Italy, which sold euro 6.8 billion ($7.6 billion) of debt on Tuesday.
The most pressing question on Day Two of Greek capital controls was: how would the ECB respond to Greece becoming the first advanced economy to miss a payment to the IMF? The central bank, which has pumped euro 89 billion of emergency liquidity assistance into the country, hasn't said how it would classify it or react. Policymakers would have to consider the effect of any missed payment on the solvency of Greek banks against the political consideration when they discuss the level of assistance on Wednesday.
The ECB's decision on whether to provide emergency liquidity assistance "will not be taken without political cover at the highest level", Erik Nielsen, global chief economist at UniCredit SpA in London, said in a note. Limited to euro 60 a day of withdrawals, Greeks will find it impossible to resume life as before. For the poorest, it will be a struggle to survive. A mere 12 hours after issuing the capital-controls decree, the government revoked a provision that exempted pension payments from the caps.
The stress is beginning to show. On Tuesday morning, two pensioners came to blows on a bus returning from the beach to Athens over who was to blame for the crisis. In the capital's Pangrati Square area, pharmacist Xenia Babou reported a "significant increase" in sales of medicines and milk powder. Outside his shop, Communist Party members handed out leaflets urging a 'no' vote in the referendum. Tsipras is counting on voters' anger after five years of austerity imposed in exchange for aid. "The referendum will give us a stronger negotiating position when the talks resume," he said in an ERT TV interview. "The higher the participation and numbers of people voting 'no', the stronger our position will be." A vote in favour would make the government's position untenable and probably lead to early elections. That could produce a new leadership, more amenable to the demands of creditors.