Learn › Economic history › The Eurozone Crisis — 2009 to 2015

The Eurozone Crisis — 2009 to 2015

The Greek Crisis of 2015

Explain why Greece's crisis returned in 2015, why its banks shut, and how the stand-off was settled.

Before you start

What you'll be able to answer

  1. Why did Greece's crisis return in 2015?
  2. Why did Greece shut its banks, and how close did it come to leaving the euro?
  3. How was the 2015 stand-off settled, and on what terms?

Where this sits

The Eurozone Crisis — 2009 to 2015 · this module is lit

  1. 21 Oct 2009Greece revises its 2009 deficit figure sharply upward
  2. May 2010Euro area governments and the IMF agree Greece's first rescue loan, EU governments agree to create rescue funds, and the ECB starts buying government bonds
  3. 28 Nov 2010Ireland agrees a rescue programme
  4. May 2011Portugal agrees a rescue programme
  5. Dec 2011 and Feb 2012The ECB makes two rounds of three-year loans to banks
  6. Mar to Apr 2012Private holders of Greek bonds take a cut of more than half in face value
  7. 20 Jul 2012Euro area ministers approve a loan to rebuild the capital of Spain's banks
  8. 26 Jul and 6 Sep 2012The ECB's president promises "whatever it takes"; the ECB announces a plan to buy struggling governments' bonds
  9. Mar to Apr 2013Cyprus takes rescue loans, while uninsured depositors, shareholders and bondholders meet the capital needs of Cyprus Popular Bank and the Bank of Cyprus
  10. Jun to Jul 2015Greece shuts its banks as savers rush to withdraw money, voters reject the lenders' terms, and euro area leaders agree to move towards a third programme

27 June 2015

Late on Friday 26 June 2015, Greece's negotiators walked out of talks with the country's lenders: the other governments of the euro area, the countries that share the euro, and the International Monetary Fund (IMF), which lends to countries in trouble. Early the next morning the prime minister, Alexis Tsipras, announced a referendum. Greek voters would decide whether to accept the terms on offer when the talks broke down. Greece's second rescue programme, a loan on conditions, had four days left to run.

Predict first

Many Greeks kept their savings in Greek banks. What do you think many of them did as talk grew that Greece might leave the euro?

Syriza won the January 2015 election

Greece had lived on rescue loans since 2010, and in return its governments had cut spending, wages and pensions. Public opposition to these policies drove the election of January 2015, the CRS says. It brought to power Syriza, whose government the CRS calls far-left and anti-austerity. Its leader, Tsipras, had pledged to reverse the cuts and seek debt relief while keeping Greece in the euro.

Tsipras became prime minister in late January, with about a month left in Greece's second programme. Syriza had campaigned to remove the troika that oversaw the programme, the history of the European Stability Mechanism (ESM), the euro area's permanent rescue fund, says. The troika was the European Commission, the EU's executive, the European Central Bank (ECB) and the IMF. In February euro area finance ministers extended the programme by four months, to the end of June.

The ECB tightened the rules for Greek banks

Banks borrow from the ECB, the central bank for the euro area, by pledging collateral, assets the lender can keep if a loan is not repaid. Greek government bonds, IOUs the government sells, were rated below the ECB's minimum, but an exception to the rule, a waiver, had let banks pledge them. On 4 February 2015 the ECB lifted the waiver, saying it could not assume the programme's review, the lenders' regular check on Greece's progress, would succeed.

When savers take money out, a bank must pay them and make up the loss, often by borrowing. From 11 February, Greek banks short of other collateral had to turn to emergency liquidity assistance: loans from the Bank of Greece, Greece's central bank, up to a ceiling the ECB sets.