Banks in Greece to remain closed Monday as crisis grows

28 Jun 2015 | Author: | No comments yet »

ECB freezes level of emergency loans to Greek banks.

ATHENS, Greece — Greek banks will remain shut for an unspecified time and the country is imposing restrictions on bank withdrawals following a recommendation by the Bank of Greece, the country’s prime minister said Sunday. The decision comes a day after the government threw Greece’s bailout negotiations into turmoil by calling a referendum on creditors’ financial proposals.

FRANKFURT—The European Central Bank said Sunday it will freeze for now the level of emergency loans for Greek banks at Friday’s level, a step that could push the country closer to having to impose capital controls to halt a deposit flight that appeared to have accelerated over the weekend. “The governing council stands ready to reconsider its decision,” the ECB said after a conference call meeting, an indication that the ECB wants to keep its options open amid rocky negotiations between Greece and its creditors over its bailout program, which expires Tuesday.The leaders of France and Germany will hold crisis meetings with their respective ministers and party leaders on Monday over the crisis in Greece, reports AFP in Paris.

Anxious Greeks have been lining up at cash machines, worried about the possibility of financial controls being imposed to stop banks from haemorrhaging funds. In France, the other half of the eurozone’s power couple, President Francois Hollande will gather key ministers together early Monday for an emergency meeting at 9am. “The leaders affirmed that their respective economic teams are carefully monitoring the situation and will remain in close touch,” the White House said in a statement. After months of tortuous negotiations, Greek Prime Minister Alexis Tsipras has confirmed capital controls – limits to how people in Greece can move their money around. But Greece’s current bailout expires on Tuesday, and the 7.2 billion euros ($8 billion) remaining in it will no longer be available to Greece after that date. The board is a seven-member body that includes the finance minister, the central bank governor and the heads of the Greek banks association, the capital markets commission and the financial stability fund.

He also suggested that his country might not pay the money it owes to the IMF on Tuesday. “We are owed money by one part of the troika and we owe money to another part of the troika. In central Athens, as least a dozen ATMs could no longer dispense bank notes, prompting Athenians and tourists alike to roam the streets in a frantic hunt for cash. The Greek parliament approved the referendum call in a majority vote. “We don’t know – none of us – the consequences of an exit from the eurozone, either on the political or economic front. According to an anonymous banking source in Greece, only 40 per cent of the nation’s cash machines currently have money in them — purely because they cannot be restocked with banknotes quickly enough.

We must do everything so that Greece stays in the eurozone,” French Prime Minister Manuel Valls told France’s i-Tele TV. “But doing everything, that means respecting Greece and democracy, but it’s also about respecting European rules. The German foreign ministry on Sunday recommended that tourists “take sufficient amounts of cash” when visiting Greece, a top vacation spot for Germans, keep tabs on the evolving situation and check for any updates to its travel recommendations. Speaking to BBC Radio 4 earlier today, Finance Minister Yanis Varoufakis said the measures were something the government will “have to work overnight on with the appropriate authorities” in Greece and in Frankfurt. Britain’s foreign office warned travellers “of the possibility that banking services — including credit card processing and servicing of ATMs — throughout Greece could potentially become limited at short notice.” If capital controls are imposed, businesses may not want to accept credit cards any longer as they would have trouble accessing their bank accounts, even if card transactions are authorised. “There is some information according to which some restaurants and filling stations haven’t accepted card payments for some time and are taking just cash,” said the Swedish foreign ministry. It is our view that a monetary union that cannot guarantee functioning banks, especially under the pretext that the Greek people have had the audacity of demanding to have a say in their future, constitutes a major denial of the very principle of monetary union.

But Andreas Andreadis, President of Greek Tourism Confederation, said “foreign clients have no problems with money transactions” and “their credit cards won’t be compromised by capital controls.” However, she suggests the IMF remains willing to help. “I have briefed the IMF Executive Board on the inconclusive outcome of recent discussions on Greece in Brussels. I shared my disappointment and underscored our commitment to continue to engage with the Greek authorities. “I continue to believe that a balanced approach is required to help restore economic stability and growth in Greece, with appropriate structural and fiscal reforms supported by appropriate financing and debt sustainability measures.

Sky’s Ed Conway says it is a “highly unusual move” from the European Commission, and will form the basis of what Greek people will vote on next Sunday. Chancellor Angela Merkel has invited leaders from all the major German parties to a crisis meeting in Berlin on Monday to discuss the Greece crisis, reports Reuters. On Friday, Ms Merkel accused Greece of taking “regressive” steps, warning that Berlin would not be “blackmailed” by the debtor’s demands, she told her MEP’s. “We have not made the necessary progress. Mixed feelings towards Greek PM Alexis Tsipras’ hardnosed attitude to European officials, reports The Telegraph’s Chief Foreign Correspondent Colin Freeman, who is in Athens.

Costas Papadopolous, a 75-year-old pensioner attempting to withdraw money from an empty ATM, says he is for the euro “no matter what” and he believes the conditions set down by the eurozone creditors have been okay. However, Lambros Stamoulis, an unemployed 29-year-old, says Europe has “lost its purpose” and it would be better for Greece to return to the national currency and leave the euro. As Greece has closed the door on making a deal with its international creditors, we can expect urgent fiscal control measures to come in from Monday. “A “No deal” scenario will probably lead to a bank holiday and then capital controls in Greece pretty soon, in our view. Apparently the team was “tucked away in the EU Commission’s Charlemagne building” around midnight on Friday night when they discovered that all their attempts to reach a compromise had been left in tatters.

They were reaching agreement on a joint proposal to be presented to a meeting of finance ministry officials set for the next morning.” So, it’s the morning after the day before.

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