ATHENS, Greece — With Greece’s future in the euro increasingly in doubt, this troubled nation cobbled together an emergency government on Wednesday and set a date for new elections amid fears that accelerated withdrawals by spooked depositors could escalate into a run on the banks.
Greek banking officials said the pace of withdrawals slowed Wednesday, a day after President Karolos Papoulias — the ceremonial head of state — conceded that almost $1 billion worth of deposits had been withdrawn or converted into safe-haven German bonds in recent days.
German Chancellor Angela Merkel called for Greece to remain part of the region’s common currency, but she also opened the door to new “stimulus” efforts to aid the economy.
Yet Merkel — who has championed austerity as a cure for Europe’s debt crisis and whose taxpayers are footing the biggest portion of the bailout here — was also quick to add that Greece must live up to its commitments to make tough economic reforms and spending cuts in exchange for its $165 billion rescue.
“I have the will, the determination to keep Greece in the euro zone,” Merkel said in an interview with CNBC. “It would be good for all of us.”
She added, “if Greece believes that there is certain stimulus for growth to be pursued in the euro zone, we’re open to this.” Her comments underscored the fine line being walked by European leaders seeking to hold the 17-nation euro zone together while also forcing Greece to make sweeping reforms.
The German leader spoke as fresh fears were brewing over Greece’s banking system, where deposits have now fallen to $214 billion, down from $236 billion as recently as last December. Papoulias said Tuesday that nearly $1 billion left in recent days as uncertainty has grown following the inclusive May 6 elections. Those divided results, including new support for parties against the bailout, left politicians unable to form a new government and raised doubts about the will in Athens to stick to terms of its agreement with the EU and International Monetary Fund.
However, two senior Greek banking officials, who spoke on condition of anonymity given the sensitivity of the issue, said recent withdrawals have not yet reached the pace seen last February, just before Greece staged an orderly debt default with private investors. “This isn’t a panic, but we have to make sure it doesn’t turn into one,” said one of the banking officials. “For that, we need our politicians to do better than they are today.” The second official added that the outflow of deposits had slowed on Wednesday as a date was set for new elections — June 17 — and as Merkel seemed to offer more solidarity with Greece.
Greece is in a political vacuum, with the government hobbling along under the direction of a little-known senior judge, Panagiotis Pikrammenos. Appointed on Wednesday, he is charged largely with shepherding the nation into next month’s new vote and will be unable to take any significant action.