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Greece has met its new finance minister as the ECB hits the country where it hurts

The European Central Bank raised the haircuts on its Emergency Liquidity Assistance to Greece this evening.

Updated at 10.15pm

Greece Bailout Former Greek finance minister Yanis Varoufakis with his successor, Euclid Tsakalotos, riding pillion in April 2015 Source: AP/Press Association Images

THE EUROPEAN CENTRAL Bank has tonight raised the haircuts on its Emergency Liquidity Assistance (ELA) to the Greek state.

In effect, this means that Greece has to pay a higher premium on the liquidity it receives from the ECB, meaning it will receive less liquidity in return.

The move is a clear sign that investment in Greece is now seen as a riskier prospect.

It sets up an intriguing Euro Group meeting tomorrow with the screw very definitely being turned on prime minister Alexis Tsipras and his government.

With Greek banks set to remain closed on both Tuesday and Wednesday, the stakes could not be higher tomorrow for the embattled country.

Meanwhile, Greece was officially introduced to its new finance minister tonight.

Former Deputy Foreign Minister For International Economic Relations Euclid Tsakalotos has officially succeeded Yanis Varoufakis who resigned this morning following the historic No vote in Greece’s bailout referendum yesterday.

Tsakalotos has been a high-profile figure throughout his country’s bailout talks in his role as co-ordinator of negotiations with Greece’s creditors’ representatives.

Greece Bailout Euclid Tsakalotos arriving for his swearing in ceremony earlier this evening in Athens Source: AP/Press Association Images

Earlier, German Chancellor Angela Merkel was reportedly in touch with Greek Prime Minister Alexis Tsipras by phone amidst the fallout from Greece’s historic referendum vote yesterday.

Separately, the IMF, the creditor from whom Greece last week defaulted, issued a statement saying that they stand “ready to assist” the troubled nation.

“The IMF has taken note of yesterday’s referendum held in Greece,” said the statement from the head of the fund, Christine Lagarde.

We are monitoring the situation closely and stand ready to assist Greece if requested to do so.

A spokesperson for the German government confirmed that Merkel and Tsipras shared a phone call earlier today.

While the exact details of that conversation have not been made public, it’s understood that Tsipras will now bring new proposals with him to tomorrow’s Euro Group meeting which may finally bring an end to the crisis deadlock.

Former Greek finance minister Yanis Varoufakis, once described by Michael Noonan as “a bit of a rock star”, has meanwhile left Greek government buildings in his own inimitable style.

Maverick Varoufakis, who quit this morning following the Greek rejection of yesterday’s referendum, left the building on his motorcycle earlier.

Greece’s next move

Earlier, Taoiseach Enda Kenny said the next move is Greece’s to make, after the country rejected creditors’ austerity demands in yesterday’s referendum.

The final tally showed 61.31 per cent of voters decisively rejecting the proposed bailout, in a momentous vote on austerity.

Greece Bailout Source: Associated Press

Participation stood at 62.5 percent, with almost 39 per cent voting ‘yes’ to the reforms put forward by the country’s creditors.

Prime Minister Alexis Tsipras’ radical left-wing government had called for a ‘no’ vote in the referendum.

In a shock move following the result, Finance Minister Yanis Varoufakis announced he was stepping down.

The combative minister – who has been at the centre of Athens’ high-profile debt negotiations for months – clashed with Greece’s creditors and refused to bow to their demands for tough austerity.

Greece Bailout Yanis Varoufakis Source: Associated Press

While the referendum was a victory for the government, Varoufakis suggested he could be an impediment to future debt talks.

“Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my ‘absence’ from its meetings,” Varoufakis wrote.

It was “an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement,” he wrote.

For this reason I am leaving the Ministry of Finance today.

Finance minister Michael Noonan said he ‘noted’ the result, adding that he hoped the Greek Government would “continue discussions with fellow member states in an effort to provide certainty for the Greek people and return stability to their economy”.

He added:

“Ireland will continue to engage in an effort to reach a successful conclusion to the negotiations.”

Dara Murphy, the Minister of State for Europe, observed that the result had democratic legitimacy.

“What was the position before the referendum and what was the position now remains unchanged, and that is that a deal will have to be done between Greece and essentially the citizens of the rest of Europe,” Murphy told Morning Ireland.

While, speaking at an event this morning, Taoiseach Enda Kenny said Athens now needed to make the first move.

“President [of the European Union] Tusk has called a meeting of the European leaders tomorrow evening in Brussels” he told reporters.

So the next move is up to the Greek government: I note the resignation of the Minister for Finance, but obviously if monies and assistance are requested and they’re needed then the first move has to come from the government.

Noonan's keynote address Michael Noonan Source: PA WIRE

Europe reacts

Meanwhile, the European Commissioner for the Euro has insisted the stability of the eurozone is not at risk after last night’s ‘no’ result.

“The stability of the euro area is not in question,” Valdis Dombrovskis told a press briefing.

“We have everything we need to manage the situation.”

The Eurogroup, comprising the 19 finance ministers from countries using the single currency, released a statement saying they expected fresh reform proposals from the Greek government in talks tomorrow.

The ministers will meet at midday (Irish time) tomorrow, hours before leaders from the eurozone nations hold an extraordinary summit to decide the way forward after the referendum.

Several leaders have described the vote as an in-out decision on Greece’s euro membership.

“The place of Greece is and remains in Europe … all sides need to act responsibly,” said Dombrovskis.

“To negotiate now the European Commission needs a mandate from the Eurogroup,” he said.

It is for the summit to determine possible paths forward.

German Chancellor Angela Merkel is also set to meet with French leader Francois Hollande in Paris later today, amid a flurry of meetings to size up the implications of the vote.

Germany Italy Angela Merkel Source: Michael Sohn

Greece’s radical left-wing Prime Minister Alexis Tsipras, who called for a ‘No’, insisted afterwards the result did not mean a “rupture” with Europe.

Dombrovskis however said there were going to be “very few winners” in the situation, adding that the “negative” outcome of the referendum “has certainly made things more complicated”.

Germany also maintained a hard line, with Berlin saying there was currently “no basis” for talks on a new bailout package or debt relief.

How is the euro doing? 

Despite growing concerns about Athens’ place in the eurozone, the single currency rallied after Varoufakis announced his shock resignation earlier.

While the euro sank to $1.0963 in US electronic trade immediately after the poll, it recovered today and ticked even higher after the politician’s announcement.

With reporting from © AFP 2015, Michelle Hennessey and Cianan Brennan.

Read: Greek government on course to win landslide victory in historic referendum

Poll: Should Greece accept the terms of a new bailout?

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