Mon, 29 Jun, 2015 12:08:49 AM FTimes – STT Report, June 29  Danske Bank's chief economist Pasi Kuoppamäki. File Photo – Lehtikuva. Danske Bank chief economist Pasi Kuoppamäki on Sunday described the Greek situation as a chaotic farce.
Kuoppamäki hit out at the Greek government saying the manner in which they decided at the last minute on the referendum was strange.
According to Kuoppamäki, the decision to hold referendum should have been taken a long time ago.
“It is possible that the Greek government is preparing to close its bank and set withdrawal limits quickly,” Kuoppamäki said.
Kuoppamäki said the banks have to be closed so that the financial system does not collapse entirely.
The Danske Bank chief economist revealed that Cyprus used the same procedure a couple of years back.
He also revealed that the banks will not remain shut for a long time.
“Demonstrations will certainly arise, and afterwards the police and the army will be on the streets,” he said.
The European Central Bank (ECB) decided to maintain the Greek emergency funding unchanged.
“The ECB does not want to immediately cause the collapse of the Greek financial system, but it will take perhaps a day or two to analyse the situation,” said Kuoppamäki.
Kuoppamäki pointed out that the funding has to be stopped at the turn of the month, if the situation is not resolved.
Despite the situation, Kuoppamäki believes the Greek government has a chance to act.
“Personally, I have been waiting – even though it did not happen – that the Greeks will give up. It may be that the Greek government will be forced to agree to the terms and conditions of donors.
“The country could also postpone the collapse if they can set up a parallel currency system.
“Perhaps the government would pay salaries and pensions in some kind of bonds against which they would obtain euros later,” said Kuoppamäki.
The credibility of the system, according to Kuoppamäki, would be very frail and chaotic.
However, Kuoppamäki sees one positive side in the crisis: the Greek disease has at least not spread to other indebted European countries such as Spain and Italy.
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