Denmark currency peg in doubt right after euro drops on Greece fears
Stocks plummet and Greek bond yields soar as Greece’s finance minister pleads for time and financial assistance from the troika 
“We didn’t even agree to disagree” says Yanis Varoufakis after talks in Berlin
Photo: AFP
• Three ways Greece can escape its debt trap
• Shares in Greece’s biggest banks fall more than 10pc
• Denmark slashes rates to -0.75pc on currency fears
• Varoufakis calls more for time and emergency bridging loans to agree debt deal
• “We didn’t even agree to disagree” says Greek minister after tense talks in Berlin
• Greece will not be blackmailed by Troika, says Prime Minister Alexis Tsipras
18.00 That’s all from today’s live coverage of developments in the eurozone. Thanks for joining.
17.50 Stock markets across Europe have rebounded after an initial panic at action by the European Central Bank late last night.
The FTSEurofirst 300 index ended the day flat, but Greece’s lenders were the biggest victims of today’s developments.
Shares in National Bank of Greece fell 12.3pc and Bank of Piraeus declined 15pc.
Greek 10-year yields also rose 57 basis points to 8.98pc.
17.00 Greece’s central bank chief has said the ECB’s waiver, which was suspended yesterday, could well be put back in place should Greece and its creditors come to some satisfactory debt deal.
The waiver, which allows the central bank to accept Greece’s junk-bonds in exchange for funding, has been suspended twice before in 2012 when Greece underwent a private debt restructuring.
GREEK CENTRAL BANK GOVERNOR STOURNARAS SAYS ECB COLLATERAL DECISION CAN BE TAKEN BACK IF THERE IS A DEAL WITH EU PARTNERS – RTRS
— financial acrobat (@finansakrobat) February 5, 2015
16.20 Here’s what that rate cut has done to Denmark’s two-year bonds. They’re now well into negative territory at -0.7pc:
16.10 How low can you go? Much lower than -0.75pc, if you’re Denmark’s central bank chief.
Danish CB chief: we probably haven’t seen the last rate cut
— Anders Svendsen (@SvendsenAnders) February 5, 2015
16.07 Stocks have closed in Athens, and the ASX rebounded in the afternoon, ending the day down by 3.37pc after a more than 9pc plunge in first minutes of the day.
The country’s banks also recovered slightly, finishing down by 10pc, after an initial 23pc decline.
15.55 The impact of events in the eurozone are not just limited to those within the monetary bloc.
Denmark has been struggling to keep control of its currency since the ECB launched quantitative easing last month.
The Danish Krone, which is pegged to the euro, has come under increasing pressure as the value of the single currency has plummeted.
Now the country’s central bank has decided to cut interest rates for the fourth time in just three weeks, to -0.75pc to protect the peg. This brings rates on a par with those in Switzerland, which announced the abandonment of its currency ceilling with the in January.
The Danish krone goes to 6.51 after central bank cuts deposit rate
— Richard Bravo (@richbravo2) February 5, 2015
15.40 Prime Minister Alexis Tsipras is back in Athens after his Grand Tour of Europe’s capitals.
The hot-footing ended on a disappointing note for the new government, but Mr Tsipras, who addressed his parliament earlier today, is remaining defiant:
“Greece won’t take orders any more, especially orders through emails” said the PM.
“Greece is no longer the miserable partner who listens to lectures to do its homework. Greece has its own voice.”
“Greece cannot blackmailed because democracy in Europe cannot be blackmailed.
15.35 Mr Varoufakis’s comments about the rise of Nazism in his country are causing a bit of a stir. The finance minister evoked the spectre of political extremism in his country as an example of why Germany, more than anyone, should sympathise with the plight of Greeks.
Here are his quotes, as reported by AFP:
“Germany must be proud of the fact that Nazism has been eradicated here,”
“When I return home tonight I shall find myself in a parliament in which the third-largest party is not a neo-Nazi party, it is a Nazi party,” Varoufakis said, referring to Golden Dawn.
14.30
From BAML: Greece has spent 90 of the past 192 years in either default or debt restructuring.
— James Titcomb (@jamestitcomb) February 5, 2015
14.12 It was another virtuoso performance from Greece’s finance minister today.
‘Rock star’ politician Yanis Varoufakis appealed to the hearts of ordinary Germans about the plight of his country. It all sounded pertty good, but not everyone is convinced.
From the FT’s John Gapper:
Yanis Varoufakis is a wonderful talker but in the end rhetoric doesn’t cut it outside the seminar room.
— John Gapper (@johngapper) February 5, 2015
14.10 Ever wanted what Ambrose Evans-Pritchard would do if he was in Mrs Merkel’s shoes? Here’s your answer:
• Re peal the idiot Fiscal Compact since it guarantees twenty years of quasi depression that will destroy Europe
• Launch a real New Deal worth €1.5bn of infrastructure and high-tech projects immediately
• rewrite the treaties to allow direct monetary financing of deficits ignite this with €2 trillion of helicopter money from the ECB
• Abolish the nation states in all but name and accept a latterday, polyglot, dysfunctional, Habsburg Empire.
14.00 Perhaps the best summary of today’s uneasy talks between Greece and Germany
13.50 Haircuts were apparently not on the agenday today, but still:
History’s most important discussion of haircuts by two bald men. #varoufakis #schauble
— Matthew Dalton (@DJMatthewDalton) February 5, 2015
13.44 Fiscal contraction in Greece “tipped the country into a self-feeding” spiral says AEP.
There is a proper therapeutic dose for austerity. The doctors overdosed. Sheer Troika incompetence. They then tried to claim the Greek were not complying in order to cover up their own blunders.
13.35 Mr Varoufakis spent much of today’s press conference appealing to Germany’s higher sense of duty towards European unity. He said Germany was the only country that could currently understand Greece’s plight, and said both he and Mr Schaueble were committed to the European project.
AEP’s thoughts:
Varoufakis wants Germany to act as “hegemon” and assume its leadership responsibilities, like the pious Hohenstaufen that upheld Christian civilization under the Holy Roman Empire.
Might find an echo of sympathy on that one.
As for Schauble – the man who made a desert and called it peace, in the earlier words of Varoufakis – he does fortunately have a sense of humour. He also wants to avert the destruction of the EU.
Yet forces have been uncorked in Germany that will make this very difficult. But again, Germany is not the biggest problem
13.20
MT @dianalizia : #varoufakis meme ”
— AmericanHedgie (@americanhedgie) February 5, 2015
13.15 Some breaking news from the ECB. German newspaper Die Welt is reporting that the central bank has granted Greek lenders access to €60bn in emergency lending assistance.
Even after yesterday’s ban on the taking of Greek bonds as collateral, the country’s banks still had access to ELA.
Our International Finance Editor, doesn’t think it is sufficient:
If so, it won’t be enough.. try €100bn and soon…
#ECB grants Bank of #Greece ELA of about €60bn ~Die Welt
— Yannis Koutsomitis (@YanniKouts) February 5, 2015
13.08 A summary of today’s press conference and Greece’s stance as laid out by Mr Varoufakis:
Predictable Nazi reference aside, on substance Varoufakis’ wants:
1) Bailout programme to lapse end of month
2) Bridging deal until May
— Mats Persson (@matsJpersson) February 5, 2015
Varoufakis critique of the current reform program: 1) 67% of what’s on the list are things we’re OK with.
— Charles Forelle (@charlesforelle) February 5, 2015
Greek Finance Minister Varoufakis: Will Endeavor To Do Everything in Our Power to Avoid Default – @DowJones
— Pedro da Costa (@pdacosta) February 5, 2015
#Varoufakis : We must never allow a 1930s-style depression divide nations #Schaeuble
— Damian Mac Con Uladh (@damomac) February 5, 2015
13.05 No translation needed here:
Fotoğraf muhabiri mesleğinin tadını çıkarıyor 🙂
Almanya Maliye Bakanı Schauble ve Yunanistan Maliye Bakanı Varufakis
— Evren Dede (@evrendede) February 5, 2015
13.00 Back on the webchat , Ambrose Evans-Pritchard isn’t pulling his punches:
Spain’s Rajoy wants Tsipras boiled alive in goose fat, and then hanged from the tallest tree in Europe
12.59 Two-thirds of Greece’s current reform programme is desirable, but the rest fails to not get to the heart of the rent-seeking in the country says Mr Varoufakis.
“We are seeking an opportunity to recast the macroeconomic philosophy of the existing reforms. Europe has an opportunity with our government and ending the business as usual philosophy.”
“Use us for turning a page in Europe.”
And with that, the press conference concludes.
12.54 Mr Varoufakis adds again for the need for a bridging loan from the ECB to allow the Greeks to negotiate.
The ECB are “agnostic” on what kind of programme Greece should adhere to he adds.
“I would like a new contract to allow the ECB to do its job in providing stability for the eurozone.”
12.52 What would happen if Greece left the euro? Ambrose Evans-Pritchard answers:
For Greece it would be cathartic. Whether it worked would entirely depend on policies then pursued, and whether EU would lend helping hand or punish Greece.
Not hopeful on either front. Syriza does not have post-Grexit road map, and would probably make a mess of it.Some EMU states would want to ensure Greece’s failure, though the French, Brits, US would help Greece. Evenly balanced.
12,49 We are doing to put the ‘d-word’ (default) on hold, affirms Mr Varoufakis. Greece will not default.
12.48 Our position has always been that the EU gave us too much money, says Mr Varoufakis:
We do not have a right to implement our debt programme, because we are part of a European family. We are asking for an opportunity to table a proposal with our mandate, and conduct a “dialectical” process.
Our proposal is for a bridging programme which will give us space to carry out these negotiations. We want a new contract between Greece and the Troika.
12.46 Over on our live webchat with Ambrose Evans-Pritchard, here’s his thoughts on the ECB’s move:
It risks setting of a pre-emptive run on Greek deposits. ELA is not equivalent. Higher rates, bigger haircuts. Amounts to liquidity squeeze. 30% crash in Greek banks stocks this morning.
Besides, they can cut off ELAs at any moment. Have shown their teeth, but their teeth will be punched out.
12.44 Time for questions…
12.42 “The German nation is the one nation that can understand us best” says Mr Varoufakis.
Ritual humiliation and unending hopelessness was the backdrop to the rise of Nazism and is what Greece also finds itself in today.
“The third biggest party in our parliament are not neo-Nazis, but Nazis,”
“We need the people of Germany on our side.”
12.40 “What we want is the most precious of commodites: time.”
He adds that Greece would like a bridging loan for its banks.
Varoufakis: #Greece and EU lost an opportunity to address the problem in 2010, treated insolvency problem as if it were a liquidity problem.
— Yannis Koutsomitis (@YanniKouts) February 5, 2015
12.39 “The largest loan in history was given to the most insolvent nations,” says Mr Varoufakis.
“You can expect from us a readiness to implement efficient reforms,” he adds.
12.36 Mr Varoufakis describes Mr Schaueble as a great European statesman.
“My message to Mr Schauble is that in our government he has a partner to solve the problems in Greece and the Union more widely.”
“Our government will stop at nothing to tackle tax evasion, corruption and crippling rent-seeking. We need Germany’s support in this.”
12.35 The ministers did not discuss the schedule of repayment on Greek debt, or the idea of a haircut says the Greek finance minister.
“Greece’s woes have been begetting indiginity in my nation. It is time to put an end to the gross indignity.”
12.34 Mr Varoufakis: ” We didn’t reach an agreement – we didn’t even agree to disagree but to enter into deliberations as partners to find European solutions to European problems.”
12.33 He finishes off by saying we need reliability as a precondition for trust.
12.31 A haircut for Greece is off the agenda says Mr Schaueble/
He adds that Germany will ensure that Europe continues to have a positive future and will stand up for a common Europe in the 21st century.
12.30 Any arrangements that are made must adhere to the existing structure of the eurozone’s treaty says Mr Schaueble.
“We have gone to the limit of what is possible and reasonble” for Greece’s debt programme, says the German minister.
12.28 Mr Schaueble says he is sceptical of some of Syriza’s measures and they do not go in the direction that Germany would like.
12.26 Two things are vital in Europe says Mr Schaueble: investment and reform.
He repeats his stance that corruption and tax evasion must be rooted out of the country, and Germany will try its best to help reform the country’s tax system.
12.23 “We agreed to disagree” – that’s Mr Schaueble’s summary of his meeting with Mr Varoufakis today. He adds that there has been no agreement with the Greek finance minister on the best way ahead for the country.
Schauble, in so many words, tells @yanisvaroufakis : troika here to stay. Get used to it.
— Peter Spiegel (@SpiegelPeter) February 5, 2015
12.22 The reasons for Greece’s problems can be attributable only to Greece and not to actors outside the country, and certainly not in Germany, adds Mr Schaeuble, who is now taking a more stern tone with his counterpart.
12.20 Mr Schauble kicks us off, describing his “great pleasure” of meeting Mr Varoufakis.
He describes the pair having a “long and full exchange” but admits “we were not in full agreement.”
Both in favour of integration, we want a strong Europe with clout
12.10 The finance ministers are in place and gearing up for their press conference.
You can watch live here.
11.35 Meanwhile protestors have gathered outside the German finance ministry to express their support for Greece:
Protestors hold a sign reading “Solidarity with Greece” during a demonstration in front of the German Finance minstry ahead on Thursday (Photo: AFP).
11.30 If Greece does end up defaulting on its debt, it won’t be the first time. As Bank of America Merrill Lynch highlights, over the past two centuries, Greece has defaulted six times on its sovereign debt. “Indeed, Greece has spent 90 of the past 192 years in either default or debt restructuring,” says Michael Hartnett, chief investment strategist at the bank.
10.55 It’s all smiles, for now. Yanis Varoufakis , the Greek finance minister, will hold a joint press conference with Wolfgang Schaeuble , his German counterpart, in about half an hour:
. @yanisvaroufakis meets Schäuble. Via @BMF_Bund
— Anton Troianovski (@AntonWSJ) February 5, 2015
10.35 Meanwhile, further signs have emerged that the Franco-German axis is starting to crumble. Francois Hollande , the French President, has said that austerity is not a solution in Greece .
Speaking at a press conference, he said that Europe’s second largest economy would help Greece to deal with its debts.
He’s also playing peacemaker. Mr Hollande said he had urged Angela Merkel , the German Chancellor to meet Alexis Tsipras , the prime minister of Greece.
Greece’s decision to elect leftist party Syriza was not a rejection of the euro or Europe, he added.
10.19 The finger pointing continues. Germany’s central bank cheif has been speaking in Venice this morning – and it looks like he’s up for a fight.
Jens Weidmann told an audience that it was Greece’s decision to stop cooperating with Europe’s debt inspectors, so they must learn to live with the consequences of their actions.
Eurozone states remain fully responsible for the consequences of their own autonomous fiscal decisions. he said in Vienna.
He also repeated that action by the European Central Bank could weaken the incentives to reform. Structural problems require structural measures, he said.
This chap’s not for turning.
10.15 Prices in the single currency area fell by 0.6pc in January compared with a year earlier , following deflation of 0.2pc in December, according to Eurostat. While the fall was overwhelmingly driven by the fall in oil prices, which have tumbled from $ 115 a barrel in June to around $ 55 today, core inflation, which strips out the impact of oil and food, rose by 0.6pc in the year to January, from 0.7pc in December.
10.05 Here’s our Brussels correspondent Bruno Waterfield with the full story :
Europe’s economies can expect to grow because of low oil prices and the European Central Bank’s quantitative easing but “downside risks have intensified” due to deflation, stagnation and low investment, according to EU economic forecasts.
New European Commission economic forecasts published predict a recovery this year for all the EU’s economies, for the first time since 2007, with growth forecast to rise to 1.7 per cent and to 1.3pc for the euro area.
Next year annual growth is expected to reach 2.1 per cent across the EU, and 1.9pc for the euro, on “the back of strengthened domestic and foreign demand, very accommodative monetary policy and a broadly neutral fiscal stance”.
“Europe’s economic outlook is a little brighter today than when we presented our last forecasts. The fall in oil prices and the cheaper euro are providing a welcome shot in the arm for the EU economy,” said Pierre Moscovici, the EU commissioner for economic and financial affairs on Thursday.
The commission’s Winter economic forecast is the most optimistic for eight years providing a welcome boost in confidence for EU institutions but with a warning that underlying weaknesses remain.
“Since the autumn, a number of key developments have brightened the near- term outlook. Oil prices have declined faster than before, the euro has depreciated noticeably, the ECB has announced quantitative easing,” the report said.
10.02 Here’s its latest inflation forecasts compared with three months ago:
10.01 The European Commission has just released its quarterly healthcheck of the 28 nation bloc. Its verdict? Tumbling oil prices will boost growth, but the fall will also leave the single currency area in deflation for the rest of the year.
Growth forecasts have been revised up:
09.55 LIVE WEBCHAT
The Telegraph’s International Finance Editor , Ambrose Evans-Pritchard will be taking part a live webchat on all matters Greece, Germany and the eurozone at 12.30pm today.
You can get your questions to AEP via Twitter, through @Telefinance, by emailing to financewebchat or posting your thoughts on the webchat.
A reminder that he wasn’t entirely pleased with yesterday’s ECB decision:
So the ECB has done it. They have wilfully thrown Greece to the wolves in a fit of pique. Let history judge. http://t.co/Wz1rPJvNJf
— A Evans-Pritchard (@AmbroseEP) February 4, 2015
09.50 All eyes will be on Wolfgang Schaeuble – Germany’s finance minister – who is due to speak to his Greek counterpart later this afternoon.
But head of Germany’s Bundesbank, Jens Weidmann, arch hawk and opponent of any debt write-offs for Athens, is speaking at an event in Venice right now.
He’s likely to be quizzed on the ECB’s collateral decision; we’ll bring you the latest when we have it.
ECB’s Weidmann Due to Speak in Venice in 5 Mins ..a speech called “Responsibility and liability in a monetary union.”
— econhedge (@econhedge) February 5, 2015
09.45 In the run up to the election last month, Greece’s banks suffered from at least €11bn in deposit flight.
Following the ECB’s decision, the new government will be hoping they can quickly reach an amicable settlement with creditors and help stem the flow of cash leaving its lenders.
The variable that really matters now is Greek bank deposits. If the outflow picks up, the banks are in big trouble.
— Duncan Weldon (@DuncanWeldon) February 5, 2015
09.42
Greek banks this morning.
— Jonathan Ferro (@FerroTV) February 5, 2015
09.40
All I have to say is “everybody calm down” on #Greece – give them a little bit of time & Oh & if you don’t understand #ECB don’t trade
— Sony Kapoor (@SonyKapoor) February 5, 2015
09.35 A Greek government official has told Reuters that his government “will not be blackmailed”.
He added Syriza was committed to finding a mutually beneficial agreement with its creditors.
09.30 The ECB perceived independence is coming under criticism today, with plenty of commentators bashing the bank for behaving as a political actor.
Last night’s decision came hours after Greece’s finance minister met Mario Draghi, and reportedly had a “fruitful exchange” with the ECB chief.
Now, governing council member Peter Praet has told French newspaper, Les Echoes that the Bank has “transparent rules” that must be applied.
Mr Praet also said that he is “not satisfied” with the ECB’s present role as part of the Troika monitoring Greece.
This is a spectacular blunder by the ECB. They have pre-empted the Council. Courts will crucify them
— A Evans-Pritchard (@AmbroseEP) February 4, 2015
09.25 Greece’s banks are taking the biggest hit this morning. After a near 20pc fall this morning, they’ve recovered slightly
#Greece Athens stock exchange “only” -5.76% now and banks “only” -13% #told_you_we_are_cool_guys 🙂
— Efthimia Efthimiou (@EfiEfthimiou) February 5, 2015
09.20 The precise impact that the central bank’s move for Greece’s lenders is not entirely clear.
Silvia Merler at think-tank Bruegel thinks the liquidity risk could be “substantial”, and calculates that Greece’s banks were borrowing €56bn from the Eurosystem facility as of last month.
The situation could also deteriorate significantly if ordinary Greeks take fright and start pulling their deposits out of the banks. From Ms Merler:
Data from the central bank of Greece show a deposit outflow of 4 billion in December, and market estimates suggest a potential additional outflow of 11 billion at least during January, in the run up to the elections.
Considering the sensitivity of Greek deposits in the past, and the precedent of Cyprus, outflows could grow substantially and banks’ liquidity need with them.
09.00 After a few days of recovery, the euro has been hit hard over the last 12 hours. Fears of an impasse between Syriza and its creditors, coupled with the ban on Greek debt as ECB collateral has seen the single currency fall to 1.13 to the dollar.
08.50 Last night’s ECB move, “tightens the screws on Greece’s ambitious and confrontational course to abandon the Troika”, according to Robert Kuenzel at Daiwa Capital Markets. More from him:
When Greek finance minister Varoufakis today meets his German counterpart (and apparent nemesis) Schäuble in Berlin to discuss his recently floated proposals for a transformation of Greek official loan debt into various new instruments, his bargaining position is likely to have been materially weakened by the ECB’s collateral ban.
08.45 The Athens Stock Exchange has opened around 8.9pc already this morning, while bonds are predictably spiking:
Volatile. Greek 3-yr yield back up at the highs post ECB move:
— Richard Barley (@RichardBarley1) February 5, 2015
08.40 What does last night’s move from the ECB mean in pratice for Greece? Here’s a brief explainer:
Greece’s junk-rated bonds had been the subject of a “waiver”, where the central bank accepted sovereign and bank debt as security in return for cheap ECB funding.
This waiver was first put in place at the height of Greece’s debt crisis in 2010, and a decision on renewing it was due on February 28. Any extension was contingent on the new Syriza government continuing to abide by its existing bailout pledges.
The ECB’s surprise move is likely to hasten the pressure on both Greece and its eurozone creditors to come to a satisfactory deal on renegotiating the country’s €240bn bailout. Should this be reached, the waiver could well be reinstated.
In the meantime, Greece’s banks will have to look to Athens rather than Frankfurt, for its immediate funding operations.
Crucially the ECB has not pulled the plug on the provision of emergency liquidity (ELA) to the country’s lenders.
08.30 Hello and welcome to the Telegraph’s live markets coverage on what could be a crucial day for Greece’s future inside the eurozone.
Last night, the ECB decided to dramatically to suspend taking Greece’s junk-rated bonds as collateral at the bank. The decision led to a fall in stocks overnight; Greece’s 10- year yields have also risen by 70 basis this morning.
The move is likely to put pressure on Athens new government and its northern creditors to come to an agreement on a new debt deal for the debt-laden country.
Finance Minister Yanis Varoufakis is in Berlin today ahead of crucial talks with his German counterpart. So far, noises from Germany suggest that they will continue to demand Syriza stick by austerity pledges made by the previous Greek government in return for any alleviation of its debt burden.