- Associated Press - Friday, June 19, 2015

LUXEMBOURG (AP) — Europe was scrambling Friday to pick up the pieces after another failed meeting over Greece’s bailout that reinforced fears that the country was heading for bankruptcy and euro exit.

Amid signs that Greeks are taking their money out of banks in growing amounts ahead of an apparent end-of-month deadline, Finnish Finance Minister Alexander Stubb said that “right now it’s touch and go” whether a deal can be brokered in time for an emergency summit of the eurozone’s 19 leaders that’s been called for Monday.

And in perhaps the biggest sign that the situation in Greece is getting increasingly unpredictable, the European Central Bank has scheduled a teleconference of its governing council to discuss emergency liquidity assistance for Greek banks — just two days after it increased the amounts it was willing to provide.

The scale of unease is evident in the fact that the ECB has been increasing the amount of emergency credit it allows Greek banks to draw on to remain afloat. The ECB could turn off that support if it thinks Greece is going bust. It would be under intense pressure to stop pumping money into a banking system that might collapse and take the ECB’s money with it.

Greek Prime Minister Alexis Tsipras tried to sound an optimistic tone despite the acrimonious failure of Thursday’s meeting of the eurozone’s finance ministers to move ahead.

He said the summit is “a positive development on the road to agreement,” claiming that those “who invest in crisis and horror scenarios will be proven wrong.”

Investors appeared to be taking the Greek developments in stride, with the main stock market in Athens down only 0.2 percent.

Greece is running out of time to secure a deal to get the money it needs to meet upcoming debt payments. The country needs its creditors to give their backing to reforms and budget cuts in return for the money it needs to meet its commitments. First and foremost Greece has to pay around 1.6 billion euros ($1.8 billion) to the IMF on June 30. Without a deal that would unlock the remaining cash in its bailout fund, about 7.2 billion euros ($8.21 billion), Greece faces bankruptcy.

Since Greece is effectively broke and relying on outside help, it may have no option other than to introduce a new currency — most likely the centuries-old drachma — to pay wages, salaries and pensions.

Relations between the creditors and the Greek government, which was elected on a promise to bring an end to the crippling austerity demanded since 2010 in return for the bailout money, have worsened significantly over the past few days, with each side blaming the other in stronger language for the impasse.

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Elena Becatoros in Athens and David McHugh in Frankfurt contributed to this report.


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