ESM’s Regling warns of Greek banking system collapse

The head of the European Stability Mechanism on Thursday warned of a collapse in the Greek banking system if the country does not secure a third bailout, saying this would have consequences for the entire euro zone.

"If everything should fail, then the Greek banking system will collapse," Klaus Regling, head of the European Stability Mechanism (ESM), told German broadcaster ARD, adding that the four biggest Greek banks were systemically relevant.

“If the four biggest systemically relevant banks in a country no longer work, this has grave consequences not just for Greece (...) but also for the whole euro zone.”

Mr Regling, who previously produced a 2011 report on the banking crisis in Ireland, said on Monday he expected the IMF to participate in a possible third bailout once their arrears were paid.