Markets Brace As Greek Debt Showdown Begins

After the left-wing Syriza party came into power following Greek elections over the weekend, markets were relatively calm as investors kept their cool with an eye on long-term stability.

However, as Syriza leader Alexis Tsipras was sworn in on Monday, eurozone policy makers began their campaign the keep Greece on track with its bailout program, setting the stage for a hard fought battle between Greece and its creditors.

Troika Firm On No Deal

On Monday, EU finance ministers expressed their concern about Tsipras’ promises to reverse the nation’s spending cuts and labor-market reforms. But even more worrying, they said, were Tsipras’ calls for the troika to write off about a third of the nation’s €300 billion worth of debt. 

German Finance Minister Wolfgang Schaeuble reinforced Germany’s position, saying that Greece made an agreement in order to receive financial aid and the terms of that agreement are binding.

Others said Greek debt relief and bailout concessions would set a dangerous precedent that could lead other bailout nations like Portugal or Ireland to ask for debt relief as well.

Markets Wobble

Worries about the two sides reaching a deal sent Greek markets down just 3.5 percent, suggesting that investors were relatively confident that the region would eventually return to stability.

Related Link: Syriza Won The Greek Election, Now What?

However economists warn that investors may be too complacent and that markets will likely see more volatility as the debate heats up. 

Greek banks have been the biggest losers  as they face uncertainty about whether or not the next installment of bailout funding, due in March, will actually be delivered. Piraeus Bank S.A., Eurobond Ergasias SA and Alpha Bank SE lost around 11 percent on Monday and National Bank of Greece NBG lost 7.7 percent.

Posted In: NewsEurozoneGlobalTop StoriesMarketsAlexis TsiprasAlpha Bank SEEurobond Ergasias SAPiraeus Bank SASYRIZAWolfgang Schäuble
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