Greece's path to economic salvation runs through its banks.
Its financial system is on the brink of collapse, shut to most business and rationing daily withdrawals to €60 (S$90). What it takes to reopen the doors of its lenders hinges on whether Greece remains in the euro zone.
To relax capital controls and return to normal business, banks need credible funding. For Greece, this depends on a euro zone bailout deal, which would include a recapitalisation to patch up a six-month bank run.
A "yes" vote in Sunday's referendum would improve the prospects of that bailout. But the banks must still find a way to survive until the deal is done.
If Greece is unable to agree on a bailout with its international creditors, the options are limited: It will need to bail out banks but will have no funds to do it. The need to reopen banks may be the trigger for Grexit.
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Greece's banking system is in forced hibernation.
Since February, the banks have been surviving on European Central Bank (ECB) emergency liquidity assistance (ELA), an €89 billion lifeline. This weekend's decision to cap this support prompted a week-long bank holiday and strict capital controls to curb deposit flight.
A further test was yesterday, when Greece was on the brink of defaulting on a €1.6 billion International Monetary Fund payment, at the same time that its current euro zone rescue agreement was due to expire. The ECB will have to decide whether to demand more collateral in exchange for emergency loans.
The decision is finely balanced. Policymakers know this could badly hit some Greek lenders, but people familiar with the debate say tougher haircuts are nonetheless expected.
IF PRO-BAILOUT VOTE WINS
A vote in favour of a euro zone bailout deal would open a path to a bank rescue but political risk would remain.
"The capital controls are difficult to reverse, based on prior examples such as Iceland," said Berenberg Bank analyst Eleni Papoula. "We would expect a prolonged period of political and financial instability."
The ECB would be expected to maintain its ELA support. But people involved in the situation expect no additional funding. Even an ELA extension may not be enough: Some banks could struggle to honour withdrawals without access to more loans.
Greece's economy would have deteriorated. So-called deferred tax credits would rely on a more dubious state guarantee.
Greek banks have lost close to €48 billion, or 27 per cent of their domestic deposits, since November. The ECB's Single Supervisory Mechanism would need to look again at whether the banks were viable and solvent.
If banks are technically insolvent, one option would be a direct recapitalisation from the euro zone's €500 billion bailout fund, the European Stability Mechanism (ESM). Greek banks are eligible for this support after passing a health check last year.
Mr Nicolas Veron of the Bruegel think-tank said the ESM taking ownership of Greek banks would show the political will to keep the euro zone intact. Such an intervention, however, would come with conditions attached.
IF VOTE AGAINST BAILOUT WINS
A "no" vote would be dire for Greece's banks. The ECB would likely withdraw ELA completely, according to officials involved in Grexit planning.
"A 'no' vote in the referendum could imply a move towards eventual Grexit," said Citi equity analyst Ronit Ghose. "In this process, the risk of Greek banks becoming nationalised is high."
Greek banks would be deemed insolvent or unviable. Without emergency loans or outside funding to rescue the banks, Greece would have few options but to create its own currency and fund banks through money- printing.
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