European markets reel as Greek euro exit odds increase

After years of negotiations and extensions and political-economic drama, the moment of truth for the "Grexit" — Greece leaving the euro single currency market — is at hand. On Sunday, Greece announced that all banks in the country will remain closed this week, after talks with Greece's creditors broke down over the weekend and the European Central Bank declined to give Greece access to more emergency financing. Greece faces a $1.7 billion payment to the IMF on Tuesday.

As markets opened Monday morning, European stock indexes dropped about 4 percent — a little less in France and Germany and a little more in Southern Europe — and government bond yields rose 30 basis points in Spain, Italy, and Portugal, raising the cost of borrowing. Chinese stocks dropped 3 percent, too, though the euro itself held steady, Reuters reports.

French President Francois Hollande played down the turmoil, saying that France has "nothing to fear" from a Grexit, and Germany's biggest business lobbying group made a similar argument. The markets don't seem totally convinced. "The Greek debt crisis really is a 'crisis' now," Kit Juckes at French bank Societe Generale tells Reuters, adding that "global markets and the world's policymakers are much more prepared for a possible Greek default and/or exit from the euro zone than they were a couple of years back."

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Early Sunday, the Greek parliament approved a referendum on Europe's demands for further financial assistance. The banks will be closed at least until after the July 5 vote, to avoid a run on the banks. Greeks can withdraw 60 euros ($67) a day with the ATM cards, but many pensioners don't have bank cards and withdraw their pensions directly from bank tellers. You can watch them line up Monday morning in the video below, despite being told the banks will be closed. Peter Weber