The people of Greece have voted “no” in the referendum. However, their victory could initiate economic chaos across Europe.
About 61% of voters said “no” to the referendum, while only 39% said yes.
Greek Prime Minister Alexis Tsipras stated that Greece will remain in the euro. However, this gives a great amount of power to the EU and the IMF because Greece is currently broke.
It is unknown how Greece is going to pay bills, operate or function without money.
It was believed that if Greece voted “no”, that would finish the negotiations and would force Greece to leave the euro. But, those results remain to be seen.
The answers will present themselves within next few days. At the moment, the fate of the country’s struggling banks is in the hands of the European Central Bank. The European Central Bank has to decide how long they will provide support to Greek banks.
It is still unknown how Greece leaving the currency might cause further contagion to other weaker eurozone economies. Greece could unveil a wave of financial panic all over Europe.
At this point, the decision is in the hands of the EU and the IMF, whether they would give in to the new government of Greece or they would force Greece out of euro.
If Greece has to switch to another currency, that could take months and present a logistical challenge, as ATMs, computers and other banking instruments have to be changed.
In case Greece has to leave euro, it will have a negative impact on global financial markets. People will lose faith in the European project, the euro will drop and major banks all over Europe will fail.
According to Romano Prodi, former chief of the European Commission and Italy’s ex-premier, the survival of the EU is now in question if the situation with Greece escalates into a catastrophe.
In addition to all this, a financial crisis has emerged in Asia and the financial collapse of 2015 is on track. And this seems to be only the beginning.