Next week probably represents the last chance for the Greek government and its official creditors to reach an agreement and prevent a default. If the negotiations fail, bankruptcy and capital controls are likely to follow. This would not necessarily lead to euro-area exit, but would certainly represent an important step in that direction.
As widely expected, the latest meeting of euro-area finance ministers—the Euro- group—ended without an agreement between Greece and its official creditors. The mood of the subsequent press conference was somber, and hopes of a deal to avoid Greece defaulting on a payment to the International Monetary Fund (IMF) on June 30 are fading fast. Indeed, the head of the Eurogroup said that the disbursement of funds before the end of the month is now “unthinkable”.
