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ECB Could Allow Greek Banks to Fail if Greeks Vote 'No' on Sunday

Greece's Prime Minister may be ready to strike a deal with the country's creditors but at the same time is urging the Greek people to vote 'no' in Sunday's referendum.

Greece's Prime Minister Alexis Tsipras is reportedly ready to accept most of the conditions offered by the country's creditors but Eurozone officials will likely wait on the sidelines until after Sunday's referendum vote. The Financial Times reports the two-page letter sent to the European Commission, the IMF and the ECB asks for an extension of the European Stability Mechanism, which expired at midnight on Tuesday, and also seeks a third rescue fund worth 29 billion euros. Berenberg's Chief Economist Holger Schmieding said, 'This all sounds a bit like a farce. First of all, Greece has asked for the extension of a bailout that no longer exists.' Early polls show widespread support for 'no' vote in Sunday's referendum on whether creditors’ proposals should be accepted . Schmieding points out that if Greeks go to the polls and vote ‘no,’ it would basically be a vote against Europe and the Euro. Schmieding said the ECB will likely have no choice but to allow Greek banks to fail if there is a ‘no’ vote. Greece has another IMF payment that is due in mid-July and a payment to the ECB worth about 3.9 billion euros which is due on July 20th. TheStreet's Ruben Ramirez reports from New York.

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