Greece’s five-year financial crisis has taken its most dramatic turn yet, with the cabinet deciding banks would remain shut for six business days with restrictions imposed on cash withdrawals.
The Athens Stock Exchange would also not open today, financial sector officials confirmed after an eight-hour cabinet meeting.
The moves were meant to staunch the flow of money out of Greek banks and spur the country’s creditors to offer concessions before a bailout programme expires tomorrow.
The accelerating crisis has thrown into question Greece’s financial future and continued membership in the 19-nation shared euro currency – and even the European Union.
For the past two days, Greeks have been rushing to ATMs to withdraw money across the country following Prime Minister Alexis Tsipras’ sudden weekend decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds.
A decree published early today in the official Government Gazette stipulates banks will not open this morning and will remain closed until next Monday. The finance minister could decide to shorten or extend that period.
Withdrawals from ATMs will be capped at €60 daily. The decree said ATMs would be working at the latest 12 hours from its publication, meaning cash machines should open by early afternoon.
Web banking transactions would be mostly free, allowing Greeks to pay bills online. However, they cannot move money to accounts abroad.
Credit and bank cards issued abroad can be used at ATMs with no restrictions, benefiting foreign visitors to Greece and its tourist industry. Anxious tourists had joined locals at ATM queues yesterday, thinking the restrictions would also apply to them.
For emergency needs, such as importing medicines or sending remittances abroad, the Greek treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.
The decision to impose capital controls came after a Bank of Greece recommendation, Mr Tsipras said during a televised address.
He blamed the Eurogroup, the gathering of the eurozone’s finance ministers, and its decision to reject a request for the bailout programme, which expires on June 30. He again asked for it to be extended by a few days to allow for a referendum.
The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of yesterday, shocked and angered Greece’s European partners.
The country’s negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.
Mr Tsipras also blamed the European Central Bank’s decision yesterday not to increase the amount of emergency liquidity the lenders could access from the central bank – meaning Greece has no way to replenish fast diminishing deposits.
“It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum,” he said.
“They will not succeed. These moves will have the exact opposite effect. They will make the Greek people more determined in their choice to reject the unacceptable … proposals and ultimatums of the creditors.”
In the referendum set for Sunday, the government is urging Greeks to vote against its creditors’ proposals, arguing that they are humiliating and would prolong the country’s financial woes.
Worried by rumours of impending fuel shortages, drivers flooded petrol stations across Greece, prompting the country’s largest refiner, Hellenic Petroleum, to issue a statement reassuring there are sufficient reserves to last several months.
Greece’s current bailout expires tomorrow, and the €7.2bn remaining in it will no longer be available to Greece after that date.
Without those funds, Greece is unlikely to be able to pay a €1.6bn International Monetary Fund debt repayment due the same day.
“We don’t know – none of us – the consequences of an exit from the eurozone, either on the political or economic front. We must do everything so that Greece stays in the eurozone,” French prime minister Manuel Valls said.
“But doing everything, that means respecting Greece and democracy, but it’s also about respecting European rules. So Greece needs to come back to the negotiating table.”
Two opinion polls published yesterday indicated that more Greeks want to stay in the eurozone and make a deal with creditors than want a rupture with the country’s European partners.
Both polls were conducted before Mr Tsipras’ referendum call, but they provide an indication of public sentiment.
On the banking front, the ECB has said it could reconsider its decision on credit levels.
“We continue to work closely with the Bank of Greece and we strongly endorse the commitment of member states in pledging to take action to address the fragilities of euro-area economies,” ECB chief Mario Draghi said.