Investors in Europe's biggest companies were braced for tumbling stock markets today (Monday) after Greeks appeared to have overwhelmingly rejected the bail-out terms of their creditors, throwing the country's future in the eurozone into jeopardy.
Last night's apparent "Big No" is set to ensure that Greece's creaking banking system will continue to be starved of liquidity, keeping them closed beyond the end of their mandated bank holiday, which is due to end tomorrow.
At least one of the four major banks was reported to have all but run out of cash, despite the imposition of capital controls which have limited ATM transactions to euros 60 (pounds 42) a day.
Amid the desperate cash crunch, the Bank of Greece was due to request an additional injection of emergency liquidity assistance (ELA) from the European Central Bank (ECB). However, with voters rejecting the conditions of the country's paymasters, the ECB is almost certain to keep ELA frozen at nearly euros 88.4bn.
Finance minister Yanis Varoufakis was due to discuss extending capital controls measures with the Greece's senior bankers last night. Greek stock markets have also been suspended.
The euro fell 1.2pc to $1.098 against the dollar last night. The prolonged period of uncertainty is expected to see investors flock to safe-haven assets such as US and German government bonds. Ahead of the vote, Europe's leading blue-chip index, the Stoxx 50, plunged 4.96pc on Friday to its lowest level since last December. Analysts at Goldman Sachs estimated the index could drop by as much as 10pc following the No result, which is set to guarantee another period of protracted negotiation between both parties. Britain's FTSE 100 is set to open 2.2pc lower by 150 points, according to IG, with Germany's DAX down as much as 4pc.
Last night, Mohamed El-Erian, chief economic adviser at Allianz Markets, said markets should be braced for a stampede away from global equities.
The Swiss franc is also set to see fresh inflows after demand for it soared following the decision to announce a referendum last week. It forced the Swiss National Bank to intervene to hold down the franc's value as the spectre of a Greek exit draws ever closer.
David Cameron, the Prime Minister, will meet Chancellor George Osborne and Mark Carney, Governor of the Bank of England, today to discuss the fallout from the referendum on Britain. "I don't think anyone should be in any doubt the Greek situation has an impact on the European economy, which has an impact on us," Mr Osborne said.
European Parliament president Martin Schulz warned a No decision would mean Greeks could no longer use the euro, forcing them to print IOUs to pay public sector salaries and pensions, and introduce another currency. Small businesses in Greece have already resorted to the use of private currencies to alleviate the liquidity crunch and continue operating in lieu of payment.
Angela Merkel, the German Chancellor, is due to meet her French counterpart, Francois Hollande, in Paris later today to discuss how to proceed with negotiations after the 'No' vote.
Governing member of the ECB Benoit Coeure said the institution stands ready to take additional measures to quell market anxiety.