Greek central bank warns of 'painful course' to euro exit

It comes as the Greek government and its international creditors blamed each other for failing to reach a deal over economic reforms.

That failure is holding up the release €7.2bn in bailout funds.

About €30bn was withdrawn from Greek bank deposits between October and April, the central bank added.

The central bank also warned the country's economic slowdown would accelerate without a deal.

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union," the Bank of Greece said in a report.

"Striking an agreement with our partners is a historical imperative that we cannot afford to ignore."

Despite the warning, Greek shares rose 0.8% in mid-morning trade on the Greek stock exchange. The Athens benchmark index has fallen 11% since Friday, with bank shares worst affected.

Austrian Chancellor Werner Faymann was in Athens on Wednesday in a last-ditch bid to end the standoff.

"For Europe to be stronger, it must show solidarity and support to any country which needs it," he said during a meeting with Greek President Prokopis Pavlopoulos.

His comments followed a harsher critique from European Union (EU) Commission President Jean-Claude Juncker, who on Tuesday accused the Greek government of misleading voters, as Greek Prime Minister Alexis Tsipras accused the EU and International Monetary Fund (IMF) of trying to "humiliate" his country.

Greece has two weeks remaining to strike a deal with its creditors or face defaulting on an existing €1.6bn (£1.1bn) loan repayment due to the IMF.

The country has already rolled a €300m payment into those due at the end of the June.

 

(BBC)