Here's What Happens Next in Greece
Following the Greek people's majority rejection of creditors' terms for austerity and the resignation of the country's finance minister, Greece's future in the European Union is more tenuous than ever.
"At this point, the pressure is on [Prime minister Alex Tsipras] to come up with a plan to stay in the euro, but time is running out," Lindsey Piegza, chief economist with Stiefel, wrote in a note to investors today.
Greek finance minister Yanis Varoufakis, 54, resigned today, which many, including Tsipras, view as a stepping stone to further negotiations with creditors.
Here's what's next for Greece:
1. Who is next finance minister?Varoufakis, an economist, announced his resignation on his blog under the title "Minister No More!"
"Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my... 'absence' from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement," he wrote. "For this reason I am leaving the Ministry of Finance today."
Varoufakis didn't state who would fill his shoes in the meantime, nor how the next finance minister would be selected. The former economics professor was elected in January with the Syriza party.
"The departure of controversial Greek finance minister Varoufakis has created some optimism that the climate has improved and that there might be a deal," said Rice University economist Ted Loch-Temzelides.
2. European leaders scrambleDeputy finance ministers from the Eurozone will meet today, as leaders frantically schedule this and other last-minute meetings. The Eurozone monetary union includes 19 of the 28 European Union member states that have adopted the euro as their currency.
Eurozone leaders are scheduled to meet on Tuesday for an emergency summit to discuss the result of the referendum. But before then, German Chancellor Angela Merkel will be meeting French President Franois Hollande tonight.
"This meeting will be crucial," said Loch-Temzelides of Merkel's meeting. "There are some differences between France and Germany, with France eager to adopt a more flexible stance in order to get a deal. The fact that finance ministers are not meeting prior to these meetings increases the chances of a breakthrough. The two sides were already close prior to the referendum."
The Eurogroup, which is comprised of the ministers of the euro area member states, will also meet on Tuesday.
3. ECB debt deadlineWhile Greece failed to meet the IMF's deadline of paying 1.5 billion euros last month, the bigger deadline is to pay the European Central Bank 3.5 billion euros by July 20. It's still possible the two sides could reach an agreement ahead of that deadline. If there's a sovereign default, the Greek banks could be ruled insolvent.
"The ECB will then stop the lifeline to Greek banks, leading to a collapse of the banking system in Greece," Loch-Temzelides said. "Banks will need to be nationalized and a new currency will be introduced. This would be a catastrophic scenario for Greece."
Loch-Temzelides predicts that there is a more than 50 percent chance that the beginnings of a deal will emerge prior to this deadline and allow for a new bailout package that will avoid this scenario.
4. No more cash in ATMsGreek banks could run out of cash by the coming weekend, Loch-Temzelides said.
"This would force Greece to issue IOUs, thus, making a big step towards leaving the euro," he said.
Varoufakis told ABC News' "This Week" before Sunday's referendum that banks are running out of money through a "politically engineered liquidity crisis."
"The European Central Bank got its margin orders from the Euro group, from our negotiating partners, to switch off liquidity. And this is why there -- there is no money in the banks. The moment we have an agreement with our partners in the Euro group, the liquidity will be switched on again," he said.
