According to a Greek official who doesn’t want to be named, the Greek delegation were yesterday subject to outright blackmail. Our ‘partners’ informed us that if Eurogroup doesn’t result in an agreement, on Tuesday the Greek government will be forced to implement capital controls. It seemed that they had taken the decision to strangle the Greek economy by cutting off funding to the banks through the ELA system. Furthermore, it seemed that the big Greek banks already knew this. Leaks from the ECB, after all, had suggested that they were preparing for a GREXIT.
Faced with this potential ‘Cyprus’ scenario, the Greek delegation made the decision to seek an agreement that would buy them some time (which in reality is all that yesterday’s agreement got them, since it doesn’t actually ensure the necessary cash flow).