Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The following day, Sunday, June 28, the ECB pulled the trigger. It froze its emergency liquidity support for Greece’s banks at its current level. The next day this would unleash a disastrous bank run. The ECB could have gone further. It could have terminated emergency liquidity assistance altogether and demanded repayment. At the crisis meeting of the ECB’s board, there were certainly votes to be had for such a drastic course of action. But the ECB’s overwhelming power put Draghi in a delicate position.64 As a member of the troika and chief provider of financial life support to the Greek banking system, the ECB was “judge, jury and executioner.”65 Draghi did not want to appear as though he were further escalating the tension or “deliberately worsening Greece’s financial plight.”66 Capping Greek access to liquidity assistance was drastic enough. To avoid an immediate collapse, the Greek banks were preemptively closed, cash withdrawals were limited to 60 euros per day and capital controls limited capital flight. Middle-class depositors formed impatient queues to withdraw their cash. Greece’s privately owned media were in an uproar. The irresponsible radicals of Syriza, they told their audience, had taken the country over the edge.